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Judge approves Hostess liquidation, 15,000 immediate layoffs

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Hostess Brands Inc. will start selling off the rights to Twinkies, Ding Dongs and other baked brands after a federal bankruptcy judge on Wednesday approved its plan for an “orderly wind-down.”

The company will also start shrinking its employee head count to 3,200 workers from 18,500, the 82-year-old pastry maker said.

Judge Robert Drain of the U.S. Bankruptcy Court in the Southern District of New York gave Hostess the go-ahead to start fielding bidders for its assets, the company said.

Drain’s approval came after the failure Tuesday of several hours of “eleventh-hour mediation” between Hostess and the Bakery, Confectionery, Tobacco and Grain Millers Union.

Hostess first moved to shut down its operations Friday, blaming the union for a strike that “crippled its operations at a time when the company lacked the financial resources to survive a significant labor action.”

Workers who walked off their jobs accused Hostess of awarding pay increases to executives while pillaging employee benefits and wages.

On Wednesday, the day before Thanksgiving, Hostess Chief Executive Gregory Rayburn testified that layoffs of 15,000 employees would begin immediately, with head counts shrinking 94% within 16 weeks. Some 3,200 workers would remain to see the shuttering through.

The company said its “inflated cost structure” – which it attributed primarily to its collective bargaining agreements with unions – put it at a “profound competitive disadvantage.”

Hostess also said it will close 33 bakeries, 565 distribution centers, 5,500 delivery routes and 570 bakery outlet stores.

The dismantling of the company will take about a year, according to the company.

But there seems to be no shortage of potential bidders for Hostess and its cult-favorite brands, which include Ho Ho’s and Wonder Bread. Possible buyers include Hurst Capital, Flowers Foods, Sun Capital Partners, Bimbo Group and Pabst Blue Ribbon backer C. Dean Metropoulos and Co., according to reports and analyst speculation.

Quipped television host Jimmy Fallon on Twitter: “Yeah, beer and Twinkies – or as I called that in college, “brunch.”

By Tiffany Hsu, Los Angeles Times

3 comments

  • Alex

    I am 37 years old I was an RSR (route sales rep.) in New York area. I worked in the Bronx wonder depot Conner street also in the westchester depot in Elmsford. There were two different division in both location one was the bread division and one for the snack cake division (hostess, drakes) I had 7 years with hostess/wonder I worked in the bread division delivering to assigned accounts in the Bronx and some territories in manhattan, we also services Yankee stadium (legends) with wonder bread foot long hot dog bread. I’m in shocked in how hostess brands stopped operations and basically we are out of a job. We worked early hours from 4am till we finished the route. My position was a commissioned based salary also base pay. I am married with 3 kids the youngest is 4 months old. Our health benefits with soon be terminated at the end of the month. I would definitely love to talk with you about my reaction about the wind down of hostess brands operation as well as myself finding a job in the future. I love this job and love interacting with my customers.

    Thank you, Alex D.
    Mobile 917-497-2442
    Call anytime or email me.

  • Simon Jameson

    The only consolation here is that we won't have to say goodbye to twinkies and ding-dongs. I just hope whoever buys into those products doesn't change the recipe.

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