Hostess Brands Inc., the bankrupt maker of Twinkies and Wonder Bread, said it had sought court permission to go out of business after failing to get wage and benefit cuts from thousands of its striking bakery workers.þþHostess said a national strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union that began last week had crippled its ability to produce and deliver products at several facilities.þþHostess Chief Executive Gregory Rayburn said in an interview on CNBC Friday morning that Hostess could not avoid liquidation, even if members of its bakers' union ended their strike immediately and went back to work.þþThe liquidation of the company will mean that most of its 18,500 employees will lose their jobs, Hostess said on Friday.þþIn the Chicago area, Hostess employs about 300 workers making CupCakes, HoHos and Honey Buns in Schiller Park. Hostess also has a bakery in Hodgkins, where 325 workers make Beefsteak, Butternut, Home Pride, Nature’s Pride and Wonder breads.þþThe 82-year-old company said it took the decision to shut down after determining that not enough employees had returned to work by a deadline on Thursday.þþThe company, which filed for bankruptcy in January for the second time since 2004, said it had filed a motion with U.S. Bankruptcy Judge Robert Drain in White Plains, New York, for permission to shut down and sell assets.þþIrving, Texas-based Hostess has 565 distribution centers and 570 bakery outlet stores, as well as the 33 bakeries. Its brands include Wonder, Nature's Pride, Dolly Madison, Drake's, Butternut, Home Pride and Merita, but it is probably best known for Twinkies -- basically a cream-filled sponge cake.þþÿWe deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike,ÿ Chief Executive Gregory Rayburn said in a statement.þþÿHostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders,ÿ Rayburn added.þþUnion President Frank Hurt said on Thursday that the crisis at the company was the ÿresult of nearly a decade of financial and operational mismanagementÿ and that management was trying to make union workers the scapegoats for a plan by Wall Street investors to sell Hostess.þþHostess said its debtor-in-possession lenders had agreed to allow the it to continue to have access to $75 million to fund the wind-down process.þþÿThere's no way to soften the fact that this will hurt every Hostess Brands employee. All Hostess Brands employees will eventually lose their jobs - some sooner than others,ÿ Rayburn said in a letter to employees.þþThe company has canceled all orders in process with its suppliers and said any product in transit would be returned to the shipper.þþIn its filing with the court, the company said it would have incurred a loss of between $7.5 million and $9.5 million from Nov. 9 to Nov. 19 in lost sales and increased costs.þþÿThese 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,ÿ it said.þþHostess had already reached agreement on pay and benefit cuts with the International Brotherhood of Teamsters, its largest union.þþThe case is In re: Hostess Brands Inc, U.S. Bankruptcy Court, Southern District of New York, No. 12-22052.
Source: Chicago Tribune
