spike in commodity prices and consolidation of major competitors reshaped the landscape and forced more restructuring.
We tried to get the senior creditors and the unions together and it dragged on and on and on and the company got weak, said the source. I'm still praying, literally, that something is worked out and they don't liquidate the business.
When Hostess filed for bankruptcy protection in January of this year the company said it must withdraw from multi-employer pension plans, address legacy health and welfare costs and secure new capital to modernize its operations.
The company has spent the last several months battling for wage cuts and other concessions from 12 unions representing Hostess workers. At one point earlier this year, Hostess had a potential outside equity investor lined up, but failure to gain pension relief from the International Brotherhood of Teamsters union killed that option, the company said in its court filing on Friday.
The company submitted offers to both the Teamsters and the bakery union in August, in what the company said was a final effort to save the company. The Teamsters accepted the proposal but the bakery union balked.
With court approval, Hostess implemented the contract changes in October. The bakery workers then launched strikes that disrupted operations at 24 bakeries. Hostess said the strikes were the final blow to the already daunting obstacles to reorganization.
The company's court filing said that it hopes it can arrange the sale of groups of assets to be operated as going concerns.
Hostess has 565 distribution centers and 570 bakery outlet stores, as well as the 33 bakeries. Besides Twinkies and Wonder Bread, its brands include Nature's Pride, Dolly Madison, Drake's, Butternut, Home Pride and Merita.
The company said in Friday's court filing that it would probably take about a year to wind down. It will need about 3,200 employees to start that process, but only about 200 after the first few months.
Hostess had been gauging acquisition interest for certain brands for months and in late September received a number of potentially viable proposals to purchase certain assets.