Hostess Liquidation Imminent After Mediation With Bakers Union Fails

Wednesday, 21 Nov 2012 12:28 PM

By Mark Holthaus

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Hostess is headed back to liquidation after failing to reach a last-gasp agreement with its bakers union.

The maker of Twinkies and Wonderbread plans to continue with a hearing on Wednesday in which a bankruptcy court judge in White Plains, N.Y., will decide if the company can shutter its operations.

Renewed talks between Hostess and The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union came after the company declared last week that it would move to wind down its business and start selling off its assets in bankruptcy court. The company cited a crippling strike that was started on Nov. 9 by the union, which represents 30 percent of Hostess workers.

After making its case to liquidate on Monday, the bankruptcy court judge noted that the two sides hadn't yet tried resolving their differences through private mediation. Both sides agreed to hold mediation proceedings on Tuesday. The reprieve gave hope that not only 18,500 jobs could be saved but that other Hostess snack labels such as Drake’s would continue churning out snacks in the Twinkies shadow, such as Devil Dogs, Sunny Doodles, and Ring Dings.

However, in a statement late Tuesday, Hostess said the mediation "was unsuccessful." The bakers union had no comment.

The company's announcement that it would move to liquidate prompted a rush on Hostess treats across the country, with many businesses selling out of Twinkies within hours, and it prompted a surge of comment on social networks.

Even if the company goes out of business, its popular brands will likely find a second life after being snapped up by buyers, meaning Hostess' closing won't be the end of Twinkies. The company says several potential buyers have expressed interest in the brands. Although Hostess' sales have been declining in recent years, the company still does about $2.5 billion in business each year. Twinkies alone brought in $68 million so far this year.

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