Latest Updates in Hostess Brands' Bankruptcy Negotiation (UPDATED: 11/19, 2:36 PST)
UPDATE: 11/19, 2:36 PST
Hostess has announced it will enter confidential mediation with the BCTGM on Tuesday November 19th following the request from the U.S. Bankruptcy Court for the Southern District of New York.
"Today’s hearing to consider Hostess Brands’ motion to wind down the Company and sell all of its assets has been adjourned until 11 a.m., EST, on Wednesday. Production remains shut down," said Hostess Brands in an official statement.
Business Review North America will continue to follow this story and update accordingly.
Hostess Brands announced today its plans to wind down operations and has filed for bankruptcy with the intention to sell all assets, including its popular brands and production facilities.
The company claims that the Bakery Confectionery, Tobacco Workers and Grain Millers Union (BCTGM) strike in which many employees of the company participated crippled Hostess’s production and led to their decision to end operations.
“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” said Gregory F. Rayburn, chief executive officer. “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.”
The BCTGM and Hostess have been in negotiations for quite some time, with employee union members taking to picket lines in response to Hostess Brand’s final offer deemed unacceptable by 92 percent of the union in September. Hostess Brands warned of its plans to file for bankruptcy on November 14th, stating that if union members did not return to work by 5 pm on November 15th, it would have no other choice but to move forward with liquidation. Hostess decided on the night of November 15th that an “insufficient number of employees” had returned to work and that the company was unable to restore itself to normal operations.
Hostess plans to sell its popular brands including Hostess, Drakes, Dolly Madison as well as its cake product brands including Twinkies, CupCakes, Ding Dongs, Ho Ho’s, Sno Balls, and Donettes. Hostess bread brands to be sold include Wonder, Nature’s Pride, Merita, Home Pride, Butternut and Beefsteak.
Hostess Brands will close its 33 bakeries, 565 distribution centers, 570 bakery outlet stores and end its estimated 5,500 delivery routes nationwide.
In response to this news the President, Richard Trumka, of AFL-CIO stated, “What’s happening with Hostess Brands is a microcosm of what’s wrong with America, as Bain-style Wall Street vultures make themselves rich by making America poor. Crony capitalism and consistently poor management drove Hostess into the ground, but its workers are paying the price.”
SEE RELATED STORIES FROM THE WDM CONTENT NETWORK:
- Hostess May File Bankruptcy if Bakers Strike Continues
- Hostess Sends Employees Layoff & Closure Notices
The BCTGM claimed that Hostess Brands’ threat to close down in the first place was the company’s plan all along. “Our members know that the plans all along of the Wall Street investors currently in control of this company did not include the operation of Hostess Brands any longer than it takes to sell the company in whole – or in part – in a way that will maximize the profits of these vulture capitalists regardless of the impact on the workforce,” said BCTGM International President Frank Hurt.
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.