Phoenix Bankruptcy Law News

Hostess Closes for Good Due to Bakers' Strike

They say a Twinkie lasts forever, but Twinkies themselves could soon be a thing of the past.

On Wednesday, Hostess warned that if sufficient employees didn't end their strike and return to work on Thursday, it would close its doors. The Bakery, Confectionary, Tobacco Workers and Grain Millers International Union, Hostess' second-largest union, called the company's bluff and continued its strike.

Turns out, Hostess' warning wasn't an empty threat. The company announced Friday it will now liquidate its assets and layoff its workforce, ABC News reports.

"We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike," CEO Gregory F. Rayborn said. The company will now lay off most of its 18,500 workers and focus on selling its assets.

Hostess junkies shouldn't worry too much. Since Hostess is such an iconic brand, a buyer will probably snatch up the assets and continue to produce the company's diabetes-inducing snacks.

It didn't have to be this way. When the company first filed for Chapter 11 bankruptcy, it planned to cut costs by restructuring and renegotiating its labor contracts.

Under the new contracts, 8-percent wage cuts would be implemented across the entire company, including management. In addition, employee health plans would be cut by 17 percent, and Hostess would stop contributing to multi-employer pension plans until 2015.

The company's workers had a choice: Take the salary and benefit cuts, or quite possibly be out of a job. The union decided to roll the dice and go on strike; Hostess' Friday announcement was the result.

Hostess' famous snacks may live on, however, as the company is expected to auction off its assets. That would likely include selling its most beloved brands, including Ding Dongs, Twinkies, and HoHos, to the highest bidder.

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