IRVING (CBSDFW.COM) - Hostess Brands Inc. announced Friday that the company will be going out of business. The snack food maker, based in Irving, is best known for treats like Twinkies, Ding Dongs and Wonder Bread. Despite the popularity and nostalgia of these grocery store staples, Hostess is reportedly more than $860 million in debt.
The Bakery, Confectionary, Tobacco Workers and Grain Millers Union (BCTGM) went on strike November 9, shutting down production at over half of the company's 36 plants. In response, Hostess permanently closed three bakeries earlier this week, sending more than 600 workers in Cincinnati, St. Louis and Seattle into unemployment. An additional 13 plants were said to be unsustainable.
Striking employees were given a 4:00 p.m. Thursday ultimatum to get back to work. But after that deadline passed without an agreement, the fate of the food company was sealed. "We simply do not have the financial resources to survive an ongoing national strike," Hostess CEO Gregory Rayburn said in a statement on Wednesday.
The final contract offer made to workers included slashed wages, commissions and pensions. Union officials said that they wanted executives to feel the hardships caused by the company's bankruptcy.
Back in January, the company sought bankruptcy protection for the second time in eight years. Hostess officials now expect to file a motion with the U.S. Bankruptcy Court and liquidate the entire business. Hostess has requested a hearing on the motion for Monday. Should the liquidation request be granted, the company's operations could begin shutting down by Tuesday.
Remaining products will be sold until they are all gone, perhaps just a matter of days, but the famous brand names are not likely to go away. Most of them will probably be purchased by other snack makers. "Many people have worked incredibly long and hard to keep this from happening, but now Hostess Brands has no other alternative than to begin the process of winding down and preparing for the sale of our iconic brands,"Rayburn told his employees on the company's website.
With news that the company is shutting down, an estimated 18,500 jobs will be lost nationwide, including some in North Texas. The company was founded in 1930. "We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike," Rayburn reiterated on Friday morning.
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