WHITE PLAINS, N.Y. — Twinkies, Ho Hos and Wonder Bread are up for sale now that a bankruptcy judge cleared the way for Hostess Brands Inc. to fire its 18,500 workers and wind down its operations.
A last-ditch effort to end a strike with Hostess' bakers union failed Tuesday night, and Judge Robert Drain on Wednesday approved the company's request to shut down its business and sell the pieces to the highest bidder.
Hostess lawyers told Drain they needed to begin the liquidation process quickly to benefit from a surge in outside interest in its brands, including Hostess, Nature's Pride, Dolly Madison and Drake's.
Hostess, based in Irving, Texas, also wanted to shut down quickly because it has been spending about $1 million a day in payroll without any income since it halted operations.
The company will send termination notices to its employees Wednesday, said CEO Gregory Rayburn. “Those employees now need to look for work,” he said.
Hostess said it plans to retain about 3,200 employees to help with the initial phase of the wind down. The entire process should take about a year.
The snack maker's demise was years in the making. Management missteps, rising labor costs and changing tastes culminated in a crippling strike by The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union.
Hostess shut down its plants late last week after it said the strike by the bakery union hurt its ability to maintain normal production. The liquidation closes 33 bakeries, 565 distribution centers, about 5,500 delivery routes and 570 bakery outlet stores, the company said.
The union pointed to steep raises executives were given last year, as the company was spiraling toward bankruptcy.
A banker working for Hostess said at Wednesday's hearing that brands typically fetch the equivalent of about a year's sales when sold off in liquidation. He said Hostess' sales are in the range of $2.3 billion to $2.4 billion a year.
Banker Joshua Scherer, of Perella Weinberg Partners, said interest in Hostess' brands has ranged from regional bakers to major national retailers.
“This is a once-in-a-lifetime opportunity to get iconic brands separate from their legacy operators,” Scherer said.
The company's announcement Friday that it would move to liquidate its business prompted people across the U.S. to stock up on their favorite Hostess treats.
At a glance
Hostess, founded in 1930, filed for Chapter 11 bankruptcy protection in January for the second time in less than a decade. Its predecessor company, Interstate Bakeries, sought bankruptcy protection in 2004 and changed its name to Hostess after emerging in 2009.