Judge Robert Drain approved the liquidation plan, CNN reported. The plan includes bonuses ranging from $7,400 to $130,500 for 19 executives and additional pay for rank-and-file employees involved in closing down the company.
Drain said Greg Rayburn, the new chief executive officer who will oversee the liquidation, has declined a bonus.
Paul Carroll, a former mechanic, drove from Kentucky to testify at the hearing. He said the company should meet its pension obligations to its employees and said it was management that "brought us down further."
The 88-year-old company created iconic junk food brands such as Hostess Twinkies. It filed for bankruptcy in 2004 and then again in January.
Managers decided to liquidate after the bakers union refused to accept cuts in pay and benefits and went on strike.