HOSTESS Brands, the bankrupt company which makes Twinkies and Wonder Bread, has sought a US court's permission to go out of business after failing to get wage and benefit cuts from thousands of its striking bakery workers.
Hostess, which has about $2.5bn in sales from a long list of snack cakes and breads, filed the request with the US Bankruptcy Court in New York on Friday.
The company, which is based in Irving, Texas, said the liquidation would mean that most of its 18500 employees would lose their jobs.
Hostess immediately suspended operations at all its 33 plants across the US as it moved to start liquidating assets.
"We'll be selling the brands and as much of the infrastructure as we can," said company spokesman Lance Ignon.
"There is value in the brands. But some bakeries will never open again as bakeries."
Ignon said the company was making final deliveries on Friday of products made on Thursday night. Hostess's top-selling products are its chocolate cupcakes, cream-filled Twinkies cakes and its powdered sugar and frosted Donettes.
Entrepreneurs on auction site eBay are asking as much as $100 for a box of 10 Twinkies - plus $5 shipping - according to one listing that went up shortly after the company's liquidation filing.
Hostess blamed burdensome wage and pension obligations for its financial woes. It said a strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which began last week, was the latest of a series of labour troubles that had crippled the company's ability to produce and deliver products at several facilities.
A few workers who were still picketing the company said they hoped that some of the Hostess operations might survive. They blamed what they called "Wall Street" management for the company's demise.
Hostess had given employees a deadline to return to work on Thursday, but the union held firm, saying it had already given far more in concessions than workers could bear and that it would not bend further.
The company was asking workers to agree to an 8% pay cut, a 20% increase in healthcare costs, closure of 10 to 12 plants and changes to pension and workday rules.
Hostess managers have complained that the terms of many of the company's 300 labour contracts have bogged down its ability to be both nimble and cost-competitive.
"The union has been the death of this company," said a human resources manager who recently left Hostess.
Hostess has 565 distribution centres and 570 bakery outlet stores, as well as the 33 bakeries. Besides Twinkies and Wonder Bread, its brands include Nature's Pride, Dolly Madison, Drake's, Butternut, Home Pride and Merita.
The company said in Friday's court filing that it would probably take about a year to wind down.
Hostess said it had been gauging acquisition interest for certain brands for months and in late September received "a number of potentially viable proposals" to purchase certain assets.
No investor was willing to acquire the entire company with the existing collective bargaining agreements in place, according to Hostess officials.
* This article was first published in Sunday Times: Business Times