A Hostess executive says millions of dollars earmarked for employee pensions were used for day-to-day operations as the company headed toward bankruptcy.
In August of 2011, Hostess announced it would stop making pension contributions. The company filed for bankruptcy five months later and shut down completely last month.
Gregory Rayburn, Hostess’s chief executive officer, said in an interview it is “terrible” that employee wages earmarked for the pension were steered elsewhere by the company.
Mr. Rayburn became chief executive in March and learned about the issue shortly before the company shut down, he said. “Whatever the circumstances were, whatever those decisions were, I wasn’t there,” he said.
Retirees are still receiving payouts on previous contributions.
Experts say what the company did probably did not violate federal law because the money didn’t come directly from employees.
™ & © 2012 Cable News Network, Inc., a Time Warner Company. All rights reserved.