Hostess Brands, Inc. strike may force company to close

by | Nov 16, 2012

One of Prime Source’s bakery suppliers – Hostess Brands, Inc. – is currently embroiled in a union dispute and their workers have gone on strike. According to the latest reports, it is possible that Hostess will be sold or closed.

Please note that your Prime Source Account Representative is closely monitoring developments and, if necessary, will have alternative solutions in place to ensure that our clients do not experience a lapse in service. If you have any questions, feel free to contact your account representative.

Twilight for Twinkies? Hostess says it may close

(Reuters) – Hostess Brands Inc said it will ask a U.S. bankruptcy judge for permission to liquidate if enough striking workers do not return to work by the end of Thursday to let the maker of Twinkies and Wonder Bread resume normal operations.

Wednesday’s announcement escalates a bitter dispute between the 82-year-old company and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, whose members constitute about one-third of Hostess’ nearly 18,000 employees.

A union spokeswoman said the union would have no immediate comment.

Workers at Hostess plants across the country had gone on strike or refused to cross picket lines on November 9 to protest pay cuts that Hostess had in bankruptcy court won the right to impose. That prompted the company at the time to raise the specter of liquidation in case of a widespread strike.

On Wednesday, Hostess said that if enough striking workers did not return to work by 5 p.m. EST (2200 GMT) the next day, the company would on Friday ask U.S. Bankruptcy Judge Robert Drain in White Plains, New York, who oversees its Chapter 11 reorganization, for permission to shut down and sell assets.

“We simply do not have the financial resources to survive an ongoing national strike,” Hostess Chief Executive Gregory Rayburn said in a statement.

The Irving, Texas-based company had previously reached agreement on pay and benefit cuts with the International Brotherhood of Teamsters, its largest union.

Hostess said if it wins permission to liquidate, it will begin to close all operations as soon as November 20, two days before Thanksgiving, and fire all plant workers except those needed to prepare its facilities for sale.

Earlier this week, Hostess said the strike forced it to permanently close three of its 36 bakeries, costing 627 jobs.

The company said it has 565 distribution centers and 570 bakery outlet stores, as well as the 33 other bakeries.

Hostess filed for protection from creditors on January 11, its second bankruptcy filing in less than three years, after failing to win concessions on pension and health benefits. The company had about $860 million of debt at the time.

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