Hostess Brands Closing!

     Hostess Brands, the maker of such iconic baked goods like Twinkies and Wonder Bread, announced on Friday that it is asking a federal bankruptcy court for permission to close its operations, blaming a strike by bakers protesting a new contract imposed on them. Because of this decision, Hostess' nearly 18,500 workers will lose their jobs as the company shuts thirty-three bakeries and 565 distribution centers nationwide, as well as 570 outlet stores.

     "We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike," said Hostess CEO Gregory Rayburn in a statement.
Hostess will now move to sell its assets to the highest bidder. That could mean new life for some of its most popular products, which could be scooped up at auction and attached to products from other companies. According to a letter that Hostess sent to its network of stores that carry its product, Hostess expects that "there will be great interest in our brands." However, it said it could not give a time frame for when the sales would take place and when its products would be available again.

     The horrible part of all of this though is that even if those brands are bought and restarted, the Hostess workers will not get their jobs back. Hostess filed for bankruptcy in January, its second trip to bankruptcy court since 2004. They previously emerged from restructuring in 2009 after a four-and-a-half year process. The company is now controlled by a group of investment firms, including hedge funds Silver Point Capital and Monarch Alternative Capital. Frank Hurt, president of the bakers' union, called the liquidation "a deep disappointment" but said his members weren't the ones responsible, blaming the various management teams in place at Hostess over the past eight years for failing to turn the firm around.

     While approval of the bankruptcy court is needed before Hostess can start selling its assets in liquidation, the company said production at all of its bakeries stopped effective Friday, and that stores will no longer receive products from Hostess Brands after the final round of deliveries of products that were made Thursday night. However, products that are already in stores can be sold, and the outlet stores will remain open for about a week to sell the products they already have.

     Back in September, membership of one of its major unions, the International Brotherhood of Teamsters, voted narrowly to accept a new contract with reduced wages and benefits. The Bakers' union rejected the deal, however, prompting Hostess management to secure permission from a bankruptcy court to force a new concession contract on workers. The Teamsters union, which represents approximately 6,700 Hostess workers, issued a statement blaming mismanagement by Hostess executives for the company's problems.

     Overall, this is a sad moment for Twinkie lovers all throughout the United States. Personally, I've never been a fan of their products; I'm pretty sure I actually got sick from one of their products. Regardless of my opinion however, I find it horrible that the 18,500 workers at Hostess are going to lose their jobs. I wish them the best and I hope that they can find work in a reasonably short amount of time.

Article Links

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