* Company filed liquidation request early Friday
* Says all 33 bakery plants closed
* Expects to take a year to wind down
* Says it has received a number of proposals to buy assets
By Carey Gillam
Nov 16 Hostess Brands Inc, the bankrupt maker of
Twinkies and Wonder Bread, has sought a U.S. court's permission
to go out of business after failing to get wage and benefit cuts
from thousands of its striking bakery workers.
Hostess, which has about $2.5 billion in sales from a long
list of snack cakes and breads, filed the request with the U.S.
Bankruptcy Court in New York early Friday morning.
The Irving, Texas-based company said the liquidation would
mean that most of its 18,500 employees would lose their jobs.
Hostess immediately suspended operations at all of its 33
plants across the United States as it moves to start liquidating
assets, it said.
"We'll be selling the brands and as much of the
infrastructure as we can," said company spokesman Lance Ignon.
"There is value in the brands. But some bakeries will never open
again as bakeries."
Ignon said the company was making final deliveries on Friday
of products made Thursday night. Hostess's top-selling products
are its chocolate cupcakes, cream-filled Twinkies cakes and its
powdered sugar and frosted "Donettes."
Entrepreneurs on auction site eBay are asking as
much as $100 for a box of 10 Twinkies - plus $5 shipping -
according to one listing that went up shortly after the
company's liquidation filing. "Soon To Be Gone Forever," the
Hostess blamed burdensome wage and pension obligations for
its financial woes. It said a strike by members of the Bakery,
Confectionery, Tobacco Workers and Grain Millers International
Union, which began last week, was the latest of a series of
labor troubles that had crippled the company's ability to
produce and deliver products at several facilities.
A few workers were still walking picket lines early Friday
morning, many expressing hope that some of the Hostess
operations might survive. They blamed what they characterized as
"Wall Street" management for the company's demise.
"The people who are running this company are not interested
in making bread," said Roger Harrison, 56, who bags buns at the
Hostess plant in Lenexa, Kansas, and has been with the company
for 35 years.
"They are not in the baking industry; they are just
interested in the money," said Harrison, 56. "This company is so
unstable that once they close, maybe someone can take over and
buy it and give us more stability."
Union President Frank Hurt said management was trying to
make union workers the scapegoats for a long-held plan by Wall
Street investors to break up Hostess.
Hostess had given employees a deadline to return to work on
Thursday, but the union held firm, saying it had already given
far more in concessions than workers could bear and that it
would not bend further.
The company was asking workers to agree to an 8 percent pay
cut, a 20 percent increase in healthcare costs, closure of 10 to
12 plants and changes to pension and workday provisions.
Hostess managers have complained that terms of many of the
300 labor contracts that the company has in place have bogged
down its ability to be both nimble and cost-competitive.
"The union has been the death of this company," said a human
resources manager who recently left Hostess.
The company, which filed for bankruptcy in January for the
second time since 2004, filed its liquidation motion with U.S.
Bankruptcy Judge Robert Drain in White Plains, New York, seeking
permission to shut down and sell assets.
Hostess has 565 distribution centers and 570 bakery outlet
stores, as well as the 33 bakeries. Besides Twinkies and Wonder
Bread, its brands include Nature's Pride, Dolly Madison,
Drake's, Butternut, Home Pride and Merita.
The company said in Friday's court filing that it would
probably take about a year to wind down. It will need about
3,200 employees to start that process, but only about 200 after
the first few months.
Hostess said it had been gauging acquisition interest for
certain brands for months and in late September received "a
number of potentially viable proposals" to purchase certain
No investor was willing to acquire the entire company with
the existing collective bargaining agreements in place,
according to Hostess officials.
SunTrust Robinson Humphrey analyst William Chappell Jr. said
Flowers Foods Inc could be among the potential buyers
for some Hostess assets. And he said the company's liquidation
was a "positive step" for the sector as it will shrink the
number of major vendors.
"The consolidation should lead to a more normalized
competitive environment," he said.
Hostess said its debtor-in-possession lenders had agreed to
allow it to retain access to $75 million to fund the wind-down
The company has canceled all orders with its suppliers and
said any product in transit would be returned to the shipper.
In its January bankruptcy filing, Hostess listed assets of
$981.6 million. In a February filing, it assessed the value of
its patents, copyrights and other intellectual property at some
$134.6 million, although it did not break down the value by
The company's last operating report, filed with the
bankruptcy court in late October, listed a net loss of $15.1
million for the four weeks that ended in late September, mostly
due to restructuring charges and other expenses.
The case is In re: Hostess Brands Inc, U.S. Bankruptcy
Court, Southern District of New York, No. 12-22052.