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Hostess gets approval to shut down

Nov. 21, 2012 at 5:25 PM   |   Comments

WHITE PLAINS, N.Y., Nov. 21 (UPI) -- Hostess Brands was told by a federal bankruptcy judge in White Plains, N.Y., Wednesday it can go ahead with its plans to quickly sell off its assets.

Judge Robert D. Drain acknowledged it would be better to get it over with sooner in Chapter 11 rather than later under a Chapter 7 liquidation, The New York Times reported.

"This estate will suffer substantial diminution if this wind-down plan is not quickly implemented," he said. "It appears to me that the debtors have taken the right course."

The 82-year-old baker of Twinkies, Ho Hos, Ding Dongs and Wonder Bread, which shut down production lines Friday, has said the final nail in its coffin was a strike by union workers. Union leaders accused Hostess management of enjoying high pay at the expense of rank-and-file workers.

The company's popular brand-name products have attracted attention from potential buyers, the Times said.

"Since we filed motion, we have received a flood of inquiries and think there can be a healthy competition," company attorney Heather Lennox said at Wednesday's bankruptcy court hearing.

But the future doesn't look good for employees. Hostess Chief Executive Gregory Rayburn testified he needed to lay off 15,000 of the company's 18,500 employees Wednesday afternoon.

"From this point forward, I need two things to happen," he said. "I need to maximize the value of the estate, and I need to do the best thing for the employees.

"The longer you're off the shelf, the less value you're going to get."

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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