Hostess shutdown has local impact

From Staff, Press Reports

A federal bankruptcy judge last week approved Hostess Brands’ plans to wind itself down, officially putting Twinkies and other brands on the auction block.

That also put in motion Hostess’ request to lay off 15,000 of the company’s 18,500 employees immediately, so that they could begin applying for unemployment benefits.

The shutdown resulted in the closing of the company’s bakery outlet store in Eupora and local workers losing their jobs.

In granting Hostess’ motion on Nov. 21, Judge Robert D. Drain of the Southern District of New York also cited the need for a quick and orderly shuttering of the company to avoid letting its assets molder. The alternative, a less-structured Chapter 7 liquidation, would be far worse.

Drain’s motion spells the almost certain end of the 82-year-old company, whose stable of sugary confections also includes Ho Hos and Ding Dongs.

Mediation Fails At the bankruptcy hearing, company executives and advisers espoused a simple message: Expedited sales of the failed baker’s brands will raise the maximum amount of money possible. And letting Hostess begin shutting its doors for good sooner would be kinder to employees.

Advisers sounded confident that the liquidation process, which is expected to take about a year, could yield big recoveries for creditors.

“Since we filed the motion, we have received a flood of inquiries and think there can be a healthy competition,” Heather Lennox, a lawyer for the company, said at the hearing.

The hearing followed a last-minute mediation session between Hostess and its bakery employees union Nov. 20. That gathering, convened at the behest of Drain, was meant to resolve a nearly two-week-old strike that company executives said fatally crippled its operations. But after hours, the mediation talks collapsed.

Eupora Outlet And Layoffs Hostess Brands said it intends to retain approximately 3,200 employees to assist with the initial phase of the wind-down. Employee headcount is expected to decrease by 94 percent within the first 16 weeks of the wind-down.

The wind-down means the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes, 570 bakery outlet stores and the loss of 18,500 jobs.

The closures included the Wonder/Hostess Bakery Outlet at East Roane Avenue and Factory Road.

“They shut the bakeries down and routes (nationwide) ran the last time on Nov. 16,” store Manager Margie Hillhouse said Monday. “I sold my last bread on Nov. 21 and closed at 2 p.m.”

Seven delivery routes ran out of Eupora, according to Hillhouse, who said three route builders and one mechanic were laid off here. The layoffs also include District Sales Manager Danny Mann and Hillhouse, who are still working only until the local wind-down is completed.