Business Strategies

Hostess Back to Liquidation


By Food Processing Staff

Nov 21, 2012

Hostess Brands Inc., Irving, Texas, announced late Nov. 21 that the U.S. Bankruptcy Court for the Southern District of New York approved its emergency interim motion for the orderly wind down of its business and sale of its assets.

Judge Robert Drain approved the motion after the company and the Bakery, Confectionary, Tobacco and Grain Millers Union (BCTGM) were unable to reach an agreement during an 11th-hour mediation the day before.

Hostess Brands began to wind down operations after the BCTGM, Hostess’ biggest union, refused to accept court-imposed wage and benefit cuts as part of a bankruptcy reorganization plan. The union started a nationwide strike on Nov. 9, which was joined by other unions.

Among other provisions, the court order allows Hostess Brands to return excess ingredients and packaging; provides liquidity through an amended debtor-in-possession financing agreement and consensual use of cash collateral; and authorizes the company to implement a non-executive employee retention plan to ensure the company has the necessary personnel to implement the wind down, according to company statements.

Hostess Brands said it intends to retain approximately 3,200 employees to assist with the initial phase of the wind down – that means about 18,000 will be laid off immediately. Employee headcount is expected to decrease by 94 percent within the first 16 weeks of the wind down. The entire process is expected to take a year.

See this timeline of events as reported on