Hostess Goes from Liquidation, to Negotiation, to Possible Sale

twinkies-hostessOn November 14th, Hostess, the maker of such iconic snacks as Ho-Hos, Donettes, and Twinkies announced that it would declare for a liquidation bankruptcy if union workers continued to strike.  The strike was in place since November 9th because Hostess was attempting to lower their workers’ wages by 8% by forcing a new contract on them.  Workers also said that their benefits were also being cut sufficiently.  This national strike affected factories locally in Hodgkins and Schiller Park in Illinois.

Hostess reported that they were losing up to $1 million per day as a third of their workers, members of the Bakery, Confectionery, Tobacco and Grain Millers, were on strike.  “We simply do not have the financial resources to survive an ongoing national strike,” Hostess CEO Gregory Rayburn said in a statement. “Therefore, if sufficient employees do not return to work by 5 p.m., EST, on Thursday to restore normal operations, we will be forced to immediately move to liquidate the entire company, which will result in the loss of nearly 18,000 jobs.”

This would not be the first time that Hostess declared for bankruptcy or threatened, as the company has had financial trouble as far back as 2004.  Their threat was met in court by a judge’s request to seek mediation in order to save 18,000 jobs.  When the contract negotiations failed to produce an agreement, the judge finally granted Hostess’s request on November 21st.  The company hopes that once they are shut down, they might have more luck selling off their iconic foods without their outdated factories and union workers.

Running a business requires many actions to occur at the same time.  Hostess needed to retain in house business lawyers to take them from a bankruptcy, to a negotiation, to a sale of their assets.  While small businesses don’t have the luxury of in-house attorneys, they have the option to retain a lawyer on a contractual basis.  If you are seeking general counsel for your business, contact an experienced business attorney in DuPage County.