- U of I expert: Rauner’s pension fix ‘unconstitutional’
- State Senate approves lesser penalties for marijuana possession
- State Roundup: Natural gas vehicle tax stalls in committee
- Raptors, Rangers FC announce June camp
- Student debt 101: dearth of data fuels common misperceptions
- ‘Millionaire tax’ clears House panel
- Memorial Day events at Midway’s LZ Peace Memorial
- Wallace calls for Rockford crime task force
- How we discovered the 3 revolutions of American pop
- Something is rotten in the state of US education
Hostess, bankrupt maker of Twinkies and Wonder Bread, to go out of business
Online Staff Report
Hostess Brands, the 82-year-old bankrupt company that produces Twinkies and Wonder Bread, among other products, has asked the court for permission to go out of business after failing to reach an agreement with thousands of striking workers.
According to the company, which employs 18,500, a national strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union has crippled the company’s ability to produce and deliver products.
The decision to shut down was made after not enough employees returned to work by a Thursday deadline.
The company was seeking wage and benefit cuts from thousands of the striking workers. A motion for permission to shut down operations and sell its assets was filed with U.S. Bankruptcy Judge Robert Drain in White Plains, N.Y.
Liquidation of the company will mean most of the 18,500 employees will lose their jobs.
The Irving, Texas-based company filed for bankruptcy in January for the second time since 2004. The company has 565 distribution centers, 570 bakery outlet stores and 33 bakeries. Brands include Wonder, Nature’s Pride, Dolly Madison, Drake’s, Butternut, Home Pride and Merita.
In a statement, Hostess Brands Chief Executive Gregory Rayburn said, “We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike.
“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,” he added.
Union President Frank Hurt alleged the company’s downfall was the “result of nearly a decade of financial and operational mismanagement.”
All orders in process with suppliers will be canceled and all products in transit will be returned to the company.
According to its court filing, the company would have incurred a loss of between $7.5 million and $9.5 million between Nov. 9 and Nov. 19.
“These losses and other factors, including increased vendor payment terms contraction, have resulted in a significant weakening of the debtors’ cash position and, if continued, would soon result in the debtors completely running out of cash,” the court filing said.
Hostess had reached agreement on pay and benefit cuts with the International Brotherhood of Teamsters, its largest union.
Posted Nov. 16, 2012