Hostess bankruptcy has led the US-based wholesale baker and distributor of bakery products to seek permission to pay bonuses to key managers while closing operations which would adversely affect 18,500 employees.
The liquidation process will begin as bids from private-equity firms and rivals trickle in. Hostess has requested for the closure of its 565 distribution centers and 36 bakeries at a hearing today in White Plains, New York. A week-long strike by its bakers’ union forced Hostess closing down. The union blamed the management’s tight concession demands for the liquidation, while some employees blamed both sides.
Hostess awaits permission from court to pay as much as $1.75m (£1.09m) in incentive bonuses to 19 senior managers, before the closure becomes effective. According to court filings, Hostess is asking the judge to approve its plan, which would result in thousands of layoffs resulting from the closure of 36 bakeries, 242 depots, 216 retail stores, and 311 hybrid depot- store facilities.
Hostess has 58 other leased or owned sites used for storage, warehousing of products or parking. Hostess detailed in its filing that the closing down would cost $17.6m (£11.06m) in the next three months. The plants have about $29m (£18.2m) worth of excess product ingredients, Hostess disclosed.
Detailing the closure expenses in the court filing, Hostess said, about $6.9m (£4.3m) will be spent on closing depots, while $8.8m (£5.5m) will be used to dispose off items in retail stores and $8.1m (£5.09m) will be allocated for closure of corporate offices. Perishable baked goods at retail stores will be sold at fire sales, donated to charity or destroyed.
Among the potential buyers of Hostess, C. Dean Metropoulos & Co. has expressed deep interest in buying the Hostess’s brands, which include Dolly Madison, Drake’s, Merita and Butternut. Flowers Foods, maker of Nature’s Own bread and Tastykake snacks, also may pursue some of Hostess’ assets.