Hostess Brands—the maker of Twinkies, Ding Dongs and Wonder Bread—announced it is asking a federal bankruptcy court for permission to close its operations and sell its assets, James O’Toole of CNN Money reports.The 82-year-old company, which blamed the liquidation on a strike by bakers, will shut down its 33 bakeries and 565 distribution centres nationwide as 18,500 workers lose their jobs.
Hostess filed for Chapter 11 bankruptcy in January, then reached a deal with one of its major unions in September that included a contract with reduced wages and benefits. But the 5,000 member bakers’ union rejected the deal and went on strike after a new contract cut salaries in addition to reducing the company’s pension obligations and contribution to the employees’ health care plan.
“Our members are on strike because they have had enough,” bakers’ union president Frank Hurt said in a statement on Tuesday. “They are not willing to take draconian wage and benefit cuts on top of the significant concessions they made in 2004 and give up their pension so that the Wall Street vulture capitalists in control of this company can walk away with millions of dollars.”
The company gave bakers a 5 p.m. Thursday deadline to return to work or face a shutdown of the company.
Hostess—now controlled by a group of investment firms including hedge funds Silver Point Capital and Monarch Alternative Capital—will sell its assets to the highest bidder, meaning that some of its more popular products could be picked up at auction and packaged by other companies.
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