UPDATED 7:11 a.m.: Hostess Brands Inc. says it's going out of business after striking workers across the country crippled its ability to make its Twinkies, Ding Dongs, Wonder Bread and other snacks.
The company had warned employees that it would file a motion with U.S. Bankruptcy Court Friday seeking permission to shutter its operations and sell assets if plants didn't resume normal operations by a Thursday evening deadline. It announced Friday morning it will go through with that plan.
The closing would mean the loss of about 18,500 jobs. Hostess did have operations in Glendale
PREVIOUSLY: Hostess, the company behind American classic carbs like Twinkies and Wonderbread, is threatening liquidation unless the workers currently on strike return to their jobs by the end of today.
“We haven’t seen something like this in a long time however last year you might recall that there was a dispute, not at this level of liquidation, but with the relocation of Boeing,” said Erica Deutsch, partner at the Glendale law firm Bush Gottlieb, on AirTalk. “But this is something that you see, companies have to look at their option on how to handle the situation.”
This is the latest in a long string of tumultuous economic times for Hostess – the company has filed for bankruptcy in January 2012, their second time in three years. The union strike is a response to unilateral pay and benefit cuts following the January bankruptcy.
“The union representing certain workers was able to reach a certain agreement. However the union representing the bakery, confectionary, and tobacco workers was not able to reach an agreement,” said Deutsch. “The company gave what is called the ‘Less best and final offer’ and in response the employees decided to strike to protest the terms and conditions, one of which was an eight percent wage cut.
Hostess has said that the strike could be the end of the already-struggling company, if they follow through, it would mean the loss of almost 18,000 jobs.
Liquidation would also mean the end of Twinkies, though consumers who stock up now could be eating the famous snack for years. Hostess’ days may be numbered, but their product lasts forever.
“They’re exercising their right to strike, they are protected by the law and that’s what they have done,” said Deutsch. “In response to that the company is saying, if the workers don’t come back and work by the end of the day…they have made the decision to shut the company down.”
Erica Deutsch, partner at the Glendale law firm Bush Gottlieb; adjunct professor of labor law at Loyola Law School