Latest Updates in Hostess Brands' Bankruptcy Negotiation (UPDATED: 11/19, 2:36 PST)
UPDATE: 11/19, 2:36 PST
Hostess has announced it will enter confidential mediation with the BCTGM on Tuesday November 19th following the request from the U.S. Bankruptcy Court for the Southern District of New York.
"Today’s hearing to consider Hostess Brands’ motion to wind down the Company and sell all of its assets has been adjourned until 11 a.m., EST, on Wednesday. Production remains shut down," said Hostess Brands in an official statement.
Business Review North America will continue to follow this story and update accordingly.
Hostess Brands announced today its plans to wind down operations and has filed for bankruptcy with the intention to sell all assets, including its popular brands and production facilities.
The company claims that the Bakery Confectionery, Tobacco Workers and Grain Millers Union (BCTGM) strike in which many employees of the company participated crippled Hostess’s production and led to their decision to end operations.
“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” said Gregory F. Rayburn, chief executive officer. “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.”
The BCTGM and Hostess have been in negotiations for quite some time, with employee union members taking to picket lines in response to Hostess Brand’s final offer deemed unacceptable by 92 percent of the union in September. Hostess Brands warned of its plans to file for bankruptcy on November 14th, stating that if union members did not return to work by 5 pm on November 15th, it would have no other choice but to move forward with liquidation. Hostess decided on the night of November 15th that an “insufficient number of employees” had returned to work and that the company was unable to restore itself to normal operations.
Hostess plans to sell its popular brands including Hostess, Drakes, Dolly Madison as well as its cake product brands including Twinkies, CupCakes, Ding Dongs, Ho Ho’s, Sno Balls, and Donettes. Hostess bread brands to be sold include Wonder, Nature’s Pride, Merita, Home Pride, Butternut and Beefsteak.
Hostess Brands will close its 33 bakeries, 565 distribution centers, 570 bakery outlet stores and end its estimated 5,500 delivery routes nationwide.
In response to this news the President, Richard Trumka, of AFL-CIO stated, “What’s happening with Hostess Brands is a microcosm of what’s wrong with America, as Bain-style Wall Street vultures make themselves rich by making America poor. Crony capitalism and consistently poor management drove Hostess into the ground, but its workers are paying the price.”
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The BCTGM claimed that Hostess Brands’ threat to close down in the first place was the company’s plan all along. “Our members know that the plans all along of the Wall Street investors currently in control of this company did not include the operation of Hostess Brands any longer than it takes to sell the company in whole – or in part – in a way that will maximize the profits of these vulture capitalists regardless of the impact on the workforce,” said BCTGM International President Frank Hurt.