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Hostess Motion

Hostess Motion

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Published by Chapter 11 Dockets

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Published by: Chapter 11 Dockets on Jun 29, 2012
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12/27/2013

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 1Jeffrey R. FreundZoe L. PalitzBREDHOFF & KAISER, P.L.L.C.805 Fifteenth Street N.W., 10th FloorWashington, D.C. 20005Telephone: (202) 842-2600Facsimile: (212) 842-1888
Counsel to Bakery, Confectionery, TobaccoWorkers and Grain Millers International Union and  Affiliated Local Unions Representing Debtors’ Employees
UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK
)In re: ) Chapter 11)HOSTESS BRANDS, INC., et al.,
1
) Case No. 12-22052 (RDD))Debtors. ) Jointly Administered)
MOTION OF THE BAKERY, CONFECTIONERY, TOBACCO WORKERS ANDGRAIN MILLERS INTERNATIONAL UNION FOR AN ORDER DIRECTINGPAYMENT OF POST PETITION EMPLOYEE BENEFIT CONTRIBUTIONS ANDALLOWING AN ADMINISTRATIVE EXPENSE CLAIM FOR UNPAID AMOUNTS
TO THE HONORABLE ROBERT D. DRAINUNITED STATES BANKRUPTCY JUDGE:The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, onbehalf of its thirty-five local unions who are the “authorized representatives” of certain of theDebtors’ employees and retirees (collectively, “BCTGM”), moves pursuant to 11 U.S.C.§§ 503(b)(1)(A), 507(a)(2), and 1113(f) for an order compelling immediate payment by the
1
 
The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’sfederal taxpayer identification number are as follows: (i) Hostess Brands, Inc. (0322); (ii) IBCSales Corporation (3634); (iii) IBC Services, LLC (3639); (iv) IBC Trucking, LLC (8328); (v)Interstate Brands Corporation (6705; and (vi) MCF Legacy, Inc. (0599).
12-22052-rdd Doc 863 Filed 05/09/12 Entered 05/09/12 09:57:04 Main DocumentPg 1 of 13
1222052120509000000000001
 
Docket #0863 Date Filed: 5/9/2012
 
 2Debtors (collectively, “Hostess” or “the Company”) of all post-petition collectively bargainedwage payments designated to have been made to the BCTGM pension funds (“Pension WageDeferrals”) arising from post-petition work performed by BCTGM represented activeemployees.
Preliminary Statement
1.
 
Since Hostess filed for chapter 11 protection, it has continued to benefit from thelabor of BCTGM represented employees. During this time, Hostess has refused to makeapproximately
$14,000,000
in post-petition Pension Wage Deferrals required by its collectivebargaining agreements (“CBAs”) with the BCTGM.2.
 
Because the BCTGM’s claim for Pension Wage Deferrals is based on post-petitionlabor, it is entitled to treatment as an administrative expense under section 503(b)(1)(A) of theBankruptcy Code. Moreover, the BCTGM is entitled to immediate payment because Hostess’failure to meet its collectively-bargained pension obligations constitutes an on-going violation of section 1113(f).
Jurisdiction
3.
 
This Court has subject matter jurisdiction to hear this matter pursuant to 28 U.S.C.§ 1334. This is a core proceeding pursuant to 28 USC § 157(b). Venue before this Court isproper pursuant to 28 U.S.C. §§ 1408 and 1409.
Relief Requested
 4.
 
The BCTGM seeks an order (1) awarding administrative expense status to Hostess’post-petition Pension Wage Deferrals arising on account of post-petition work by activeemployees represented by the BCTGM; (2) compelling the Hostess to immediately make thesePension Wage Deferrals; and (3) requiring Hostess to make such future Pension Wage Deferrals
12-22052-rdd Doc 863 Filed 05/09/12 Entered 05/09/12 09:57:04 Main DocumentPg 2 of 13
 
 3when they come due until and unless Hostess acts to reject the BCTGM CBAs pursuant to theCourt’s authorization.
Factual Background
5.
 
For many years, Hostess and local unions affiliated with the BCTGM have beenparties to a series of CBAs governing the wages, benefits, and working conditions of thousandsof employees at the company’s bakeries, depots, and retail thrift stores. Currently, Hostess has117 CBAs with thirty-five local unions affiliated with the BCTGM. These CBAs were reachedwith each local union in and around October 2007, during the previous bankruptcy.
See
 Declaration of Frank Hurt (“Hurt Decl.”), ¶¶ 2-4.6.
 
Each CBA is a bi-lateral agreement between a BCTGM local union and Hostess thatrequires Hostess make contributions to the Bakery and Confectionery Union and IndustryInternational Health Benefits and Pension Fund (“B&C Fund”) – a third party beneficiary of theBCTGM CBAs – in varying amounts based on hours of work performed by active Hostessemployees covered by the CBA.
See
 
id 
., ¶ 5 & Exhibit A. Hostess is required to make thesepension contributions on the tenth day of each month, based on the hours worked by BCTGMrepresented active employees during the previous month. These contributions are deferrals of amounts that would otherwise have been payable as wages to Hostess employees, but Hostessand the BCTGM local unions agreed that they would instead be paid to the B&C Fund to providepost-retirement pension benefits to Hostess employees.
See
Hurt Decl., ¶ 6.7.
 
On August 12, 2011, Hostess informed the BCTGM, its local unions, and the B&CFund that it would no longer make these Pension Wage Deferral contributions for work performed by BCTGM represented active employees, as required by the various CBAs.
See
 
id 
., ¶ 7.
12-22052-rdd Doc 863 Filed 05/09/12 Entered 05/09/12 09:57:04 Main DocumentPg 3 of 13

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