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Hostess Told it Can Begin Liquidation Process

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The company that bakes Twinkies, Hostess Brands Inc., won its court approval to begin shutting down its operations across the country and start selling its assets. It also won approval to begin laying off 18,500 employees following the mediation failure between the company and its bakers union to come to an agreement on a contract, according to the Los Angeles Times.

Robert Drain, the United States Bankruptcy Judge presiding over the case, told Hostess it could sell its plants and its brands after he sat in during the mediation on Tuesday. The union on strike is that of Bakery, Confectionery, Tobacco and Grain Millers Union, which represents close to 5,000 employees at Hostess.

  
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According to the lawyer for Hostess, Heather Lennox, said that the company has received a “flood of inquiries” from possible buyers. Some possible buyers include Sun Capital Partners, Flowers Foods Inc., C. Dean Metropoulos & Co., Grupo Bimbo and Hurst Capital.

Ken Hall, the general secretary-treasurer for the Teamsters union, which has 6,700 members employed at Hostess, said, “This is truly a sad day for thousands of families.”

Hostess, which is 82, said that it would cut its employees down to 3,200 over the next couple of months and the rest of the employees would keep their jobs until liquidation is complete, which should take about one year. The company is headquartered in Irving, Texas and has 565 distribution centers, 33 bakeries and 570 bakery outlet stores across the country.

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The company filed for bankruptcy in January for the second time in 10 years. The strike by the union was blamed for the company having to close because the strike “crippled its operations at a time when the company lacked the financial resources to survive a significant labor action.”

In 2011, Hostess said that its sales were $2.45 billion, which was a two percent decrease from the year before. Those estimates were provided by research group PrivCo. The report also said that the company’s net loss more than doubled to $341 million from $136 million.



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