Sun Capital's interest in Hostess may very well underscore how private equity firms use PBGC guarantees to pave the way for profitable investments. In January, the Center for Economic Policy Research detailed how Sun Capital used Friendly's Ice Cream's 2011 bankruptcy to wipe 6,000 employee pensions from the company's books. In that deal, the PBGC accused the buyout firm of fraud.

After filing for bankruptcy in January, Hostess tried to renegotiate pay and benefit packages with the company's unionized workers, which included near double digit salary cuts, a multi-year suspension of pension plan payments and a big cut in funding for employee health plans. In response to the deal, Hostess's bakery worker union went on strike to protest the cuts earlier in November, the company said it would close operations for good were a deal not reached expediently.

While Hostess broke ground with the Teamsters, it was unable to reach a deal with the bakery union, even after Tuesday's mediation. In trying to negotiate a deal, the private equity-owned company took widespread criticism for mismanagement, executive bonuses, high debt levels, and unfair practices tied to pension plan funding from the Teamsters and bakery workers.

In Hostess Brands Jan. 2012 bankruptcy filing, the company's biggest unsecured creditor was The Confectionery Union & Industry International Pension Fund, a unionized employee plan with a near $944 million pension claim.

Further down the list of financial losers in Hostess Brands bankruptcy and potential dissolution are the company's hedge fund investors, which include Monarch Alternative Capital, Ripplewood Holdings and Silver Point Capital.

The size of the near $1 billion union pension claim is likely, in part, because Hostess's hedge fund owners stopped contributing to the company's pension plan in August 2011, as a result of bitter labor negotiations and deteriorating finances.

Its too be seen how Hostess Brands liquidation plans play out, but taxpayers should be weary that the company's pension liabilities fall on their books as private equity investors circle the company for an investment.

-- Written by Antoine Gara in New York

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