US: Court gives Hostess green light for wind down
By Michelle Russell | 22 November 2012
 |
Hostess, which owns brands including Twinkies, asked for court approval to wind up the business after a national strike it said had "crippled" the company |
Hostess Brands has won permission from the US Bankruptcy Court for the wind down of its business and the sale of its assets.
A New York judge yesterday (21 November) approved the company's motion for the wind down after the firm was unable to reach an agreement during 11th-hour talks with the Bakery, Confectionery, Tobacco and Grain Millers Union (BCTGM).
The company, which owns brands including Twinkies, asked for court approval to wind up the business last week after a national strike that it said had "crippled" the company. However, the bankruptcy court asked for the company and the BCTGM union to enter into mediation, which on Tuesday, Hostess confirmed had been "unsuccessful".
The wind down will mean the closure of 33 bakeries, 565 distribution centres, around 5,500 delivery routes, 570 bakery outlet stores and the loss of 18,500 jobs.
Hostess had already begun shutting down facilities last week after strikes by the bakery union hurt its ability to maintain normal production. Union officials have insisted the failure of successive managers and owners - and not the workforce's decision to launch strike action - was the reason for the company's woes.
The company said it intends to retain around 3,200 employees to assist with the initial phase of the wind down. The entire process is expected to be completed in one year.
"The wind down was necessitated by an inflated cost structure that put the company at a profound competitive disadvantage," Hostess said. "The biggest component of the company's costs was its collective bargaining agreements that covered 15,000 of 18,500 employees."
Hostess is now actively calling for prospective bidders for the company's assets.
Sectors: Bakery, Financials
Companies: Hostess Brands
View next/previous articles
23 Nov 2012 -
23 Nov 2012 -
just-food's research round-up: Sugar and sweeteners in France, European dairy industry outlook
Currently reading -
US: Court gives Hostess green light for wind down
Related research
Hostess Brands, Inc. - Strategic SWOT Analysis Review
Hostess Brands, Inc. (Hostess) is a wholesale baker and distributor of fresh baked bread and sweet goods. It offers a variety of products including breads, buns, rolls, croutons, stuffing, dressings, snakes cakes, donuts and other related products un...
This report covers all segments of the diverse packaged snack food industry, from salty to sweet and everything in between, examining market trends and recent industry developments. It also profiles leading companies, including those also involved wi...
Bread & Rolls in the United States
Bread & Rolls in the United States industry profile provides top-line qualitative and quantitative summary information including: market share, market size (value and volume 2007-2011, and forecast to 2016). The profile also contains descriptions of ...
Related articles
On the money: Flowers confident on cakes ahead of Hostess return
US baker Flowers Foods has said it is "confident" its snack cake business will continue to thrive even as the new-look Hostess Brands returns to the market, with products including Twinkies.
US: Acquisition boosts Flowers Foods Q1
US baker Flowers Foods recorded an increase in earnings in the first quarter driven by gains from a recent acquisition.
Read more on this hot issue
US baker Hostess Brands to wind up business
A national strike from workers has, the company said, forced it to wind up the business, which owns brands including Hostess and Twinkies.
There are currently no comments on this article
Be the first to comment on this article