Hostess Brands shuts down bakery operations

Less than 24 hours after its deadline for workers to end their strike passed without word of an end to the walkout, Hostess Brands Inc. today filed a motion with the US Bankruptcy Court seeking permission to close its business and sell its assets, including its brands and facilities.

Hostess says it has suspended bakery operations at all plants, while delivery of products will continue and Hostess Brands retail stores will remain open for several days in order to sell already-baked products.
On Monday, Hostess Brands permanently closed three plants (St. Louis, Cincinnati and Seattle) as a result of the work stoppage, and on Wednesday the company announced it would be forced to liquidate if a sufficient number of employees did not return to work to restore normal operations by 5 p.m., EST on Thursday. The company determined last night that an insufficient number of employees had returned to work to enable the restoration of normal operations.

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” says Gregory F. Rayburn, chief executive officer. “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.”

Those assets include 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores throughout the United States, as well as numerous brands, including Hostess, Drakes, Dolly Madison, Twinkies, CupCakes, Ding Dongs, Ho Ho’s, Sno Balls, Donettes, Wonder, Nature’s Pride, Merita, Home Pride, Butternut and Beefsteak.

Hostess said its debtor-in-possession lenders have agreed to allow the company to continue to have access to the $75 million financing facility put in place at the start of the bankruptcy cases to fund the sale and wind down process, subject to US Bankruptcy Court approval.

As part of the Nov. 16 filing Hostess said it has asked the US Bankruptcy Court for authority to continue to pay employees whose services are required during the wind-down period.

As of this morning, the BCTGM and The Teamsters had not issued a response to Hostess’ announcement.