Hostess files to liquidate company

Nov. 16, 2012 at 6:31 PM
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NEW YORK, Nov. 16 (UPI) -- U.S. bakery Hostess Brands, makers of Twinkies and Devil Dogs, has filed for permission to liquidate, saying it cannot weather a strike by its bakers.

The company, which is already in bankruptcy court, has 33 bakeries and 565 distribution centers, CNNMoney reported Friday.

It has 18,500 workers -- 5,000 of them, represented by Bakery, Confectionery, Tobacco Workers and Grain Millers, went on strike Nov. 9, when the company imposed a contract that cut pay 8 percent, ABC News reported. The union said the contract cut benefits by 27 percent to 32 percent.

"We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike," Hostess Chief Executive Officer Gregory Raymond said in a statement Wednesday.

BCTGM President Frank Hurt said in a statement this week the company was "making a mockery of the labor relations system that has been in place for nearly 100 years."

The 82-year-company makes several products that are household names -- snacks such as Twinkies, Ho Hos, donettes, Fruit Pies, and Hostess Cupcakes -- the shiny, chocolate cupcake decorated with a curlicue of white icing across the middle. The company also makes Wonder Bread.

The Chicago Tribune reported a 10-count box of Twinkies was listed on eBay for $200,000, but dozens of other listings appeared at more realistic prices. Chicago-area convenience stores have reported selling out of Twinkies within hours of opening.

"What's happening with Hostess Brands is a microcosm of what's wrong with America, as Bain-style Wall Street vultures make themselves rich by making America poor," AFL-CIO President Richard Trumka said in a statement Friday. "Crony capitalism and consistently poor management drove Hostess into the ground, but its workers are paying the price."

Hostess, which is controlled by a group of investment firms including hedge funds Silver Point Capital and Monarch Alternative Capital, had told the union bakers had a deadline of 5 p.m. EST Thursday to return to work.

Members of the International Brotherhood of Teamsters voted in September to accept a contract that cut wages and benefits.

The company went to court after the bakers' union rejected its contract offer, to force workers to accept a contract that included an 8 percent pay cut in the first year of a five-year deal, with raises of 3 percent penciled in for the following three years and a raise of 1 percent for the final year of the contract.

The company said it had asked to lower its contribution to the pension and healthcare plans, in return for giving workers equity in the company.

The union said it had agreed to concessions in previous contracts to help the company survive bankruptcy.

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