Twinkling Bonuses for Twinkie Executives but Nothing for Retirees and Pensions?

Looks like the Hostess with the 'mostest' might end up being Hostess executives who are submitting claims to the bankruptcy court for payment of $1.8 million in bonuses.

Bankruptcies are always legally messy but liquidation is supposed to go like this:

Secured creditors get paid first, they are typically the bondholders.

If there is any money left, the unsecured creditors then get paid.

After secured and unsecured creditors are paid, what is left goes to the stockholders.

Hostess Executive Bonuses: Twinkie-Maker To Seek Approval For $1.8 Million In Bonuses During Liquidation  Huffington Post

Hostess Brands Inc. said Thursday that it's in talks with 110 potential buyers for its iconic brands, which also include CupCakes, Ding Dongs and Ho Hos. The suitors now include at least five national retailers such as supermarkets, a financial adviser for the company said in bankruptcy court. The process has been "so fast and furious" Hostess hasn't been able to make the calls seeking buyers it previously intended, said Joshua Scherer of Perella Weinberg Partners.

"Not only are these buyers serious, but they are expecting to spend substantial sums," he said.

The update on the sale of the company's brands comes as Hostess seeks approval in U.S. Bankruptcy Court in the Southern District of New York in White Plains, N.Y. to give its top executives bonuses totaling up to $1.8 million as part of its wind-down plans. The company says the incentive pay is needed to retain the 19 corporate officers and "high-level managers" during the liquidation process, which could take about a year.

Two of those executives would be eligible for additional rewards depending on how efficiently they carry out the liquidation. The bonuses would be in addition to their regular pay.....

In court Thursday, an attorney for Hostess noted that the company is no longer able to pay retiree benefits, which come to about $1.1 million a month. Hostess stopped contributing to its union pension plans more than a year ago.

This is a very interesting legal issue.  It makes no sense to me that executive bonuses should have a higher claim priority on financial resources than pension obligations in a bankruptcy proceeding.

For more on Twinkie and Hostess, see:

A Twinkie Autopsy

Somebody is robbing the Twinkie grave, even before it's cold dead body is covered with dirt.