IRVING, Texas (AP) -
Twinkies may not last forever after all.
Hostess Brands Inc., which
makes Ding Dongs, Wonder Bread and other snacks, filed a motion Friday
with U.S. Bankruptcy Court seeking permission to shutter its operations.
The move comes after the company said striking workers across the
country crippled its ability to maintain production.
The closing would mean the
loss of about 18,500 jobs. The company said employees at its 33
factories were sent home and operations suspended Friday and its roughly
500 bakery outlet stores will stay open for several days to sell
remaining products.
Hostess CEO Greg Rayburn
said in an interview that there was no buyer waiting to buy the company.
But without giving details, he said that there has been interest in
some of its 30 brands, which include Dolly Madison, Drake's and Nature's
Pride snacks.
Rayburn said the financial
impact of the strike makes it too late to save the company even if
workers have a change of heart. That's because the company was operating
on thin margins and stalling production meant the loss of critical
sales.
"The strike impacted us in
terms of cash flow. The plants were operating well below 50 percent
capacity and customers were not getting products," Rayburn said.
Hostess, based in Irving,
Texas, filed for Chapter 11 protection in January, its second trip
through bankruptcy court in less than a decade, as it struggled with
increased competition, Americans' move toward healthier eating and the
high pension, wage and medical costs related to its unionized workforce.
The move to liquidate comes
after a long battle with its unions. Thousands of members of the
Bakery, Confectionery, Tobacco Workers and Grain Millers International
Union went on strike last week after rejecting a contract offer that
slashed wages. The bakers union represents about 30 percent of the
company's workforce.
Rayburn said the union's
leadership had misled members into believing there was a buyer in the
wings who would rescue the company. He said the union hadn't returned
the company's calls for the past month.
A representative for the bakers union did not immediately return a call seeking comment.
Although many workers
decided to cross picket lines this week, the company said it wasn't
enough to keep operations at normal levels; three plants were closed
earlier this week.
The company had reached a
contract agreement with its largest union, the International Brotherhood
of Teamsters. The Teamsters had urged the bakery union this week to
hold a secret ballot on whether to continue striking.
Hostess has said the
company is unprofitable under its current cost structure, in large part
because of its union wages and pension costs. Rayburn said that sales
volumes had been flat to slightly down leading up the bankruptcy filing.
In a statement on the company website, he said all employees will
eventually lose their jobs, "some sooner than others."
"Unfortunately, because we
are in bankruptcy, there are severe limits on the assistance the
(company) can offer you at this time," Rayburn wrote.
The liquidation hearing
will go before a bankruptcy judge Monday afternoon. Rayburn said he's
confident the judge will approve the motion.
"There's no other alternative," he said.
The move to liquidate was unwelcomed news to some customers.
Adil Ahmed, whose family
still eats Hostess treats during the holidays, said he rushed to the
supermarket Friday morning after hearing the news. Growing up in New
Jersey, he said his Southeast Asian family bought Wonder Bread to dip in
curries and loaded up on sweets from a nearby warehouse for the
holidays.
"I have nephews and nieces -
we have to pass on the tradition to the next generation," said Ahmed, a
25-year-old union worker in Baltimore. He bought four boxes of Twinkies
and other snacks for a family get together this weekend.
