Twinkie Maker Hostess to Shut Down After Strike

By Phil Milford, Dawn McCarty and Bill Rochelle - Nov 16, 2012 8:52 AM ET

Hostess Brands Inc., the maker of Wonder bread and Twinkies, said it will shut down and liquidate after a strike by members of its bakery workers’ union “crippled” the company’s operations. By Scott Olson/Getty Images

Hostess Brands Inc., the bankrupt maker of Wonder bread and Twinkies, said it will fire more than 18,000 workers and liquidate after a strike crippled operations.

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Chief Executive Officer Gregory F. Rayburn said today in a statement.

Union members “crippled the company’s ability to produce and deliver products at multiple facilities,” and “bakery operations have been suspended at all plants,” the company said in the statement.

The wind-down will close the remaining 33 bakeries and 565 distribution centers, Hostess said. Photographer: Ken James/Bloomberg

Rayburn said Hostess will dismiss most of its 18,500 employees and focus on selling assets. Shipments of bread, snack cakes and other products will continue until supplies run out, he said.

The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike Nov. 9 after a bankruptcy judge in White Plains, New York, imposed contract concessions that 92 percent of the union’s workers rejected.

Hostess Brands Inc. Wonder Bread signage is displayed outside of the company’s bakery in Sacramento, California. Photographer: Ken James/Bloomberg

Union Statement

“The crisis facing Hostess Brands is the result of nearly a decade of financial and operational mismanagement that resulted in two bankruptcies, mountains of debt, declining sales and lost market share,” the union said yesterday in astatement. The company “attempted to resolve the mess by attacking the company’s most valuable asset — its workers.”

Hostess closed three of its 36 plants permanently Nov. 12, blaming the strike. The company said it determined last night that not enough employees had returned to work to restore normal operations. The wind-down will close the remaining 33 bakeries and 565 distribution centers, Hostess said.

Hostess Brand Inc. Wonder Bread shipping trucks wait to be loaded with deliveries at the company’s bakery in Sacramento, California. Photographer: Ken James/Bloomberg

Hostess today filed a motion asking the judge overseeing its bankruptcy to hold a Nov. 19 hearing to approve the company’s request to shut down.

The company, based in Irving, Texas, filed under Chapter 11 for a second time in January, listing assets of $982 million and liabilities totaling $1.43 billion.

The new case is In re Hostess Brands Inc., 12-22052, U.S. Bankruptcy Court, Southern District of New York (White Plains). The prior bankruptcy was In re Interstate Bakeries Corp., 04- 45814, U.S. Bankruptcy Court, Western District of Missouri (Kansas City).

To contact the reporters on this story: Phil Milford in Wilmington, Delaware, atpmilford@bloomberg.net; Dawn McCarty in Wilmington, Delaware, at dmccarty@bloomberg.net; Bill Rochelle in New York at wrochelle@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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