Hostess Brands has sent letters to its 18,500 employees warning of possible liquidation and job losses, after a federal judge ruled on Friday that the company could cancel all union contracts.
The maker of Wonder Bread, Twinkies, and other snack cakes sent out letters under the WARN (Worker Adjustment and Retraining Notification) Act, which requires employers to give at least 60 days’ warning of plant closures and mass layoffs. The company said that its goal remained to emerge from bankruptcy but warned in the letter that “despite our best efforts, certain events may occur that would require Hostess to sell all or portions of its business and/or wind down its operations and liquidate.”
The company’s future is still uncertain, as negotiations with unions continue. The Teamsters Union – Hostess’ biggest, representing about 7,500 workers – has said it would strike if the company throws out its union contracts, and both the union and the company have agreed that this would most likely result in liquidation.
“We remain ready, willing and able to negotiate a deal with the Company that creates a viable enterprise that preserves the maximum number and highest quality of jobs,” the Teamsters bosses said in a letter to members. “But we will not let the Company force a poorly defined or inequitable Turnaround Plan on its employees that, despite our concessions, is destined to put Hostess out of business once and for all.”
Hostess filed for Chapter 11 bankruptcy in January, citing pension and medical benefit obligations, restrictive work rules, a continuing difficult economic climate, and a more difficult competitive landscape.
It said at that time that it would seek to reach an agreement with unions over labor agreements, as employee costs had squeezed the company, in addition to higher ingredient prices, and a more competitive US bakery sector.
However, unions, including the Teamsters and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), have blamed “ineffective executives” for the company’s problems.