Hostess Bankruptcy 2012; Liquidation Resumes After Failed Meditation
The liquidation of Hostess Brands Inc. will continue after a failed meditation took place with the company and the Bakery Union.
A judge with the U.S. Bankruptcy Court in N.Y. said Wednesday that the Twinkie producer will return to selling off the company's assets after an unsuccessful negotiation that will result in the loss of over 18,000 jobs, according to ABC News.
Judge Robert Drain commented at the beginning of Wednesday's proceedings saying: "It's clear to me that all parties participated in good faith. It's a free country. People are free not to agree."
Earlier this week, the company was questioned by the U.S. Justice Department after Hostess tried to get permission to give their senior managers a 75 percent bonus of their annual pay so they would stay on while the company winds-down operations.
Court documents released by a U.S. Trustee agent said that the plan was an improper use of the company's funds and that an independent trustee would possibly be appointed to oversee the final distribution of assets, according to the Chicago Tribune.
It's unlikely that Twinkies and other beloved Hostess products will die with the company.
Some of the companies that are potentially interested in acquiring Hostess Brands are Little Debbie makers McKee Foods, ConAgra and Flowers Food.
The classic American brand may also find new ownership with the Mexican bread maker El Grupo Bimbo. Bimbo owns part of other successful brands in the U.S. such as Entemann's and Sara Lee.
One of the reasons Hostess gave for the bankruptcy was a devastating strike which started on Nov. 9.
Members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International (BCTGM) Union, which represents 30 percent of Hostess workers, did not agree to an eight percent cut of wages. The union workers blamed the company's management for its downfall and not the strike.
Around 18,500 Hostess employees will be out of a job after the liquidation and closing of 33 bakeries, 565 distribution centers and 570 outlet stores.
