Hostess Up For Bankruptcy Hearing In White Plains
WHITE PLAINS, N.Y. (CBSNewYork) -- New York will play host Monday to Hostess brands, as the maker of Twinkies, Drake's cakes and Wonder Bread will have a hearing in U.S. Bankruptcy Court in White Plains.
Hostess had warned employees that it would file a motion in Bankruptcy Court to unwind its business and sell assets if plant operations didn't return to normal levels by Thursday evening, CBS Chicago reported.
The closing meant the loss of about 18,500 jobs. The company said employees at its 33 factories were sent home and operations were suspended Friday, adding its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.
Hostess chief executive officer Greg Rayburn said in an interview late last week 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.
Brand strategist Adam Hanft told CBS 2's Slattery that Hostess lost its way.
"The company never focused on the brands. The brands got into this death spiral," Adam Hanft said.
After more than 80 years in business, 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.
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.
"There's no other alternative," Rayburn said.
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