Some of the company’s $2 billion in unfunded liabilities could get dumped on the federally sponsored Pension Benefit Guaranty Corporation (PBGC), raising premiums for the many solvent companies that are obliged to participate. Worse yet, a lot of Hostess’s liability is to union “multiemployer” plans, which under a peculiarly onerous federal law follow a “last-man-standing” rule of liability under which companies still operating are made to pick up the obligations of those no longer in business. David Kaplan at Fortune quotes a Credit Suisse report to the effect that multiemployer plans “are now underfunded by $369 billion.” [Ivan Osorio, CEI]
And for wider background on the company’s decline: Scott Shackford, Reason, on who killed Hostess. Plus: “It’s a poorly evolved parasite that kills its Hostess.” [@mr_archenemy]
One Comment
Vitamin fortified bread was a great public heath measure when introduced. There is now no reason for me to pay extra for Wonder Bread over the significantly cheaper house brand.