Hostess to shut down due to employee strike

According to the Chicago Tribune, on Nov. 16, Hostess Brands received a court order for an expedited hearing on its request to liquidate.

November 16, 2012

According to the Chicago Tribune, on Nov. 16, Hostess Brands received a court order for an expedited hearing on its request to liquidate. The hearing on liquidation request is scheduled for Nov. 19, in bankruptcy court in White Plains, N.Y. The bankrupt maker of Twinkies and Wonder Bread said it had sought court permission to go out of business after failing to get wage and benefit cuts from thousands of its striking bakery workers.

Hostess, which has about $2.5 billion in sales from a long list of iconic consumer brands of snack cakes and breads, said it had suspended operations at all of its 33 plants around the United States as it moves to start liquidating assets.

Hostess said a strike by members of the Bakery, Confectionery, Tobacco Workers, and Grain Millers International Union (BCTGM) that began last week had crippled its ability to produce and deliver products at several facilities, and it had no choice but to give up its effort to emerge intact from bankruptcy court. The Irving, Texas-based company said the liquidation would mean that most of its 18,500 employees would lose their jobs.

Hostess had given employees a deadline to return to work on Nov. 15, but the union held firm, saying it had already given far more in concessions than workers could bear and that it would not bend further. Union officials blamed mismanagement for the company’s woes.

The company, which filed for bankruptcy in January for the second time since 2004, has 565 distribution centers and 570 bakery outlet stores, as well as the 33 bakeries. Its brands include Wonder, Nature’s Pride, Dolly Madison, Drake’s, Butternut, Home Pride, and Merita, and of course Twinkies.

“We do not have the financial resources to weather an extended nationwide strike,” said Gregory Rayburn, CEO of Hostess. “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.”

The company said in court filings that it would probably take about a year to wind down. It will need about 3,200 employees to start that process, but only about 200 after the first few months.

Chicago Tribune article

Hostess statement

BCTGM statement

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