Hostess Brands closing down Operations
(Best Syndication News) - Hostess Brands Inc. announced that they would be seeking approval from the U.S. Bankruptcy Court to close their business and liquidate their assets. The liquidation would involve selling off their iconic brands and facilities. The company announced that the bakery operations at the various plants will stop. However, the company will continue to operate Hostess Brand retail stores for several days after November 16, 2012 to sell products that have already been baked.
Only four days earlier, on November 12, Hostess Brands closed three plants because of a nationwide strike initiated by the Bakery, Confectionery, Tobacco Workers, and Grain Millers International Union (BCTGM). The company warned workers that if they did not return to normal production by 5 p.m. EST on November 15, that they would be forced to liquidate their business. On the night of November 15, the company decided that not enough of their employees returned to work.
The strike was initiated after the BCTGM union rejected Hostess Brands offer to reduce worker compensation. Hostess Brands Inc. was in the process of Chapter 11 bankruptcy which began in January 2012. In order to emerge from bankruptcy and gain financing, Hostess Brands needed to reduce operating costs. The company offered 12 unions that represented their workers a 25 percent ownership stake in the company in exchange for the benefit and work rule concessions. The unions would have also had representation on the Board of Directors and $100 million in reorganized Hostess Brands’ debt.
"We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike," said Gregory F. Rayburn, chief executive officer. "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."
Hostess Brands will be selling their popular brands including Hostess®, Drakes® and Dolly Madison®, which make iconic cake products such as Twinkies®, CupCakes, Ding Dongs®, Ho Ho's®, Sno Balls® and Donettes®.
Hostess Brands is seeking court approval to pay employees that continue to work during the wind-down time. Hostess Brands will continue to post important announcements at www.hostessbrands.info.
Fans of the Hostess Twinkies have been clearing store shelves of the products after the announcement was made on Friday. Some boxes of Twinkies have ended up for sale on eBay. Even though Twinkies have become known for having a shelf life that can last through the Apocalypse, there are still expiration dates.
By: Dave Reddy