Hostess terminating 15,000 employees after mediation fails
It's official. Twinkies are toast, at least as far as being a Hostess product is concerned.
Hostess CEO Gregory Rayburn testified at a bankruptcy hearing Wednesday that he will have to terminate 15,000 employees, effective right away, after a last-ditch mediation session failed Tuesday night to find agreement between the unions and Hostess Brands.
The liquidation hearing to save more than 18,000 jobs at the iconic baker resumed Wednesday morning in White Plains, N.Y., bankruptcy court. U.S. Bankruptcy Judge Robert Drain started the proceedings by underlining that the mediation talks would remain secret.
"I'm sure that many present here would like to know what happened," he said. "Mediations cannot be effective unless the parties can do so candidly."
After all the aggression and acrimony, was there any way to bridge the chasm? Was there any hope? Or was it more hard-nosed negotiating, bluffs, and brinkmanship?
"It's clear to me that all parties participated in good faith," said Drain. "It's a free country. People are free not to agree."
"Sadly," said the judge. "We must proceed to liquidation."
The announcement last week that the company would need to liquidate after a strike by workers that the company said crippled its business, consumers cleared store shelves of Hostess products, especially Twinkies, out of fear they would never taste the spongy, yellow cakes again.
There could be a silver lining in this Twinkie tale. Hostess bankers testified to a "flood" of inquiries into buying Hostess brand names from other food makers, from stores and supermarkets, including Wal-Mart, and from investment interests.
According to testimony by a Hostess Brands advisor, many of the interested buyers have asked if they could keep some of the workers employed in the factories.
To keep value for the brands, including Twinkies, Ho Hos, Sno Balls and Wonder bread, the buyers need to move as fast as possible. That could mean keeping jobs for as seamless a transition as possible.
In the meantime, 15,000 employees need to be terminated immediately, Rayburn testified, "so that they can qualify for unemployment."