Hostess Closes; Twinkies Maker Approved To Liquidate Assets
on Nov 22, 2012 10:46 AM EST
Hostess is officially closed.
The 82-year-old Twinkies producer called it quits while the assets of the company are liquidated. A bankruptcy court ruled on Wednesday that the company can begin shutting down operations, according to Reuters.
One final attempt was made to rectify the situation by a judge with the U.S. Bankruptcy Court. A meditation failed between Hostess Brands Inc. and the Bakery Union blamed for the downfall of the company.
18,000 jobs in total will be lost with 15,000 immediately discharged, according to the Chicago Tribune.
The company angered many workers this week when Hostess attempted to give their senior management a 75 percent bonus of their annual pay to try and persuade them to stay onboard, while the company started to wind-down. However, a U.S. Trustee agent stopped the plan and said it was unfair and an improper use of the company's final funds.
While the company distributes their assets, Gregory Rayburn, CEO of Hostess Brands, expressed his optimism. During an interview with ABC News he remarked: "I think we'll find buyers. A few have surfaced already since Friday expressing interest in the brand to acquire them."
And there certainly are buyers ready.
According to Fox News, one of the companies seeking ownership is El Grupo Bimbo, the largest bread-baking company in the world that is based in Mexico. The acquisition of Hostess Brands will add to the list of well-known U.S. companies owned in part by Bimbo, which include Thomas' English Muffins, Sara Lee and Entemann's.
Some of the other companies possibly interested in acquiring Hostess Brands are Little Debbie makers McKee Foods, ConAgra and Flowers Food.
One of the reasons Hostess gave for the bankruptcy was a devastating strike which started on Nov. 9.
Members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International (BCTGM) Union, which represents 30 percent of Hostess workers, did not agree to an eight percent cut of wages. The union workers blamed the company's management for its downfall and not the strike.
In September, the Teamsters Union agreed to the new contract that cut wages and benefits that the Bakery Union went on strike against. The Bakery Union would not agree to the deal, which meant an 8 percent salary cut in the first year of the five-year agreement. Salaries were then scheduled to bump up 3 percent in the next three years and 1 percent in the final year.
Around 18,500 Hostess employees will be out of a job after the liquidation, with the closing of 33 bakeries, 565 distribution centers and 570 outlet stores. The company has had financial trouble for the past few years with bankruptcies filed in 2004 and January of this year.
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CREDIT: Reuters.com/Fred Prouser