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Ding Dong! Hostess is dead.
Bankrupt Hostess said late yesterday that last-ditch negotiations with its bakers’ union to salvage the 82-year-old maker of Twinkies, Ho Hos and Ding Dongs were “unsuccessful.”
A bankruptcy judge had ordered Hostess execs and union leadership to enter a one-day mediation session before he would agree to liquidate the company.
Barring a miracle, Hostess, which also makes Wonder Bread and Drake’s cakes, is expected to ask a judge today for permission to sell off its assets at an 11 a.m. hearing in White Plains, NY.
Hostess said Friday it had no choice but to shutter 33 plants and lay off 18,000 workers following a crippling strike by its bakers.
The company filed for Chapter 11 bankruptcy in January, blaming mounting debt and rising labor costs. While its largest union, the Teamsters, agreed to cuts, the bakers union refused after accepting labor concessions during the company’s first trip through bankruptcy in 2004.
Sources said Hostess wouldn’t budge from its current demand for an 8 percent wage cut and a 17 percent reduction in health- care benefits.
The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union also showed little willingness to compromise. Indeed, the head of the union, Frank Hurt, did not attend yesterday’s session.
A union spokesperson did not return calls.
Hostess’ post-bankruptcy lenders are reluctant to inject fresh capital into the business, which would likely be needed to restart operations, a source said.
It’s also unlikely a private-equity firm will swoop in and buy the entire company as it would have to lend Hostess as much as $50 million to restart operations. That loan would rank behind the post-bankruptcy lending group in the line of creditors.
Competitors are expected to vie for Hostess’ snacks division, although many Hostess workers will still end up without jobs.