Hostess Brands throws in the towel: Strikes cause full business closure
The bakery giant is now up for sale to the ‘highest bidder’.
All bakery plant operations have ceased today but delivery of products will continue and Hostess Brands retail stores will remain open for several days to sell already-baked products.
The liquidation means the closure of 33 bakeries, 565 distribution centers, around 5,500 delivery routes and 570 bakery outlet stores across the US.
Brands now up for sale include Hostess, Drakes, Twinkies, Wonder and Nature’s Pride.
With deep regret
“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Gregory Rayburn, CEO, said today.
“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,” he said.
The liquidation today did not come without warning.
Strikes from members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) commenced last Friday 9, angered by a pay-cutting deal enforced upon them as part of Hostess's attempts to recover.
Of the 18,500 Hostess employees, one-third are members of the BCTGM.
Over the last week, Hostess has made several calls on the striking employees to reconsider the impact of their actions and return to work.
On Monday 12 November the firm closed three plants as a result of the strikes, leading to 672 job losses. On Wednesday 14 November it announced that should the strikes continue and sufficient numbers of employees fail to return to work by 5pm EST yesterday, it would liquidate the company.
That has happened today. “The company determined on the night of November 15 that an insufficient number of employees had returned to work to enable to restoration of normal operations,” Hostess said.
Wind down
Hostess said its debtor-in-possession lenders have agreed to allow access to $75m financing facility put in place at the start of the bankruptcy cases back in January to enable it to fund the sale and wind down process.
The motion filed to the US Bankruptcy Court today asks for authority to continue to pay employees whose service will be required during this wind-down period.
All information for customers, vendors and employees is being centralized HERE.
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