November 23, 2014
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Shoppers sadly clear last of Hostess products from shelves
John Howell
Shelves were quickly cleaned off at the Hostess Wonder Outlet in Warwick after Friday's announcement that the company was liquidating.

Tomorrow could be the last day for the Hostess Brand thrift store on Jefferson Boulevard.

According to a district sales manager, who asked that his name not be used, additional deliveries of product are expected but after that, the doors will be closed and locked.

But according to Associated Press reports from yesterday afternoon, the iconic snack cakes might not be entirely done for. The AP reports that the judge hearing the bankruptcy trial of Hostess Brands, Inc. has ordered the company to mediate with one of its largest unions, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM). What this means is that Hostess isn’t out of business just yet. The news followed Hostess’ move to liquidate all assets in bankruptcy court. The company cited BCTGM’s strike for crippling the company.

Judge Robert Drain, who is hearing the case in U.S. Bankruptcy Court in the Southern District of New York in White Plains, N.Y, said he was hoping to prevent the loss of 18,500 jobs that would result from Hostess’ closure. The mediation is set for today at 1 p.m, and the lawyer for the BCTGM will ask if his client is willing to participate in the proceedings, since he was not present yesterday. Proceedings are slated to continue on Wednesday morning. Despite this delay, the Warwick store is still a ghost of what it once was. Shelves were bare with the exception of bread, powdered soups, a few boxes of oatmeal and about a dozen jars of fruit preserves. Cleaned out within hours of Friday’s announcement that Hostess Brands Inc. would close operations across the country, leaving more than 18,000 employees jobless, were such iconic brands as Twinkies, Ding Dongs, Ho Ho’s, Sno Balls and Donettes.

On Saturday morning there were lines inside the store that, to the recollection of workers, has been a part of Warwick for at least 30 years. Shoppers packed carriages with discounted breads, cakes and just about anything they could find. And they commiserated.

“What a shame the unions put this company right out of business,” said Donna Johnson. Johnson, a regular at the store, said she doesn’t know where she will go now.

She’s not the only one to be impacted.

The store employs 57. Thirty-five routes are operated from the Warwick facility that, in the course of a week, distributed 120,000 loaves of bread and cakes to area stores. That is about $300,000 of product weekly.

Stores have already been informed that Hostess won’t be taking out dated product from their shelves. They won’t be back.

Included in those 120,000 loaves are the 30 loaves of bread Dan Petrocelli has been buying weekly since 2001 for Precious Angels Childcare Center of Warwick. Petrocelli, director of the center, had no idea where he would go now.

“You can’t beat their prices,” he said. His purchase yesterday was even cheaper than usual – about half price – but that didn’t make him happy.

“I love you girls,” he announced to store cashiers before bestowing hugs to some. “I’ll see you.”

According to a press release issued Friday by Hostess, “the board of directors authorized the wind-down of Hostess Brands to preserve and maximize the value of the estate after one of the company’s largest unions, the BCTGM, initiated a nationwide strike that crippled the company’s ability to produce and deliver products at multiple facilities.”

On Nov. 12, Hostess permanently closed three plants as a result of the work stoppage. Two days later, it announced it would be forced to liquidate if enough employees did not return to work to restore normal operations by 5 p.m., EST on Nov. 15. The company determined on the night of Nov. 15 that an insufficient number of employees had returned to work to restore normal operations.

“If the bakers had crossed those lines, we’d be working right now,” said one Hostess employee who actually doesn’t expect to get laid off until Dec. 3. He reported that phones at the Warwick distribution facility aren’t being answered. Callers, he said, get a recorded announcement that operations are closed.

In September, the bakers union rejected a last, best and final offer from Hostess Brands designed to lower costs so that the company could attract new financing and emerge from Chapter 11. Hostess then received Court authority, on Oct. 3, to unilaterally impose changes to the union’s collective bargaining agreements.

According to the company, Hostess Brands is unprofitable under its current cost structure, much of which is determined by union wages and pension costs. The offer to the BCTGM included wage, benefit and work rule concessions but also gave Hostess Brands’ 12 unions a 25 percent ownership stake in the company, representation on its Board of Directors and $100 million in reorganized Hostess Brands’ debt.

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Gregory F. Rayburn, chief executive officer said in a statement made Friday.

The wind-down means the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores throughout the United States.

The company said its debtor-in-possession lenders have agreed to allow the company to continue to have access to the $75 million financing facility put in place at the start of the bankruptcy cases to fund the sale and wind-down process, subject to U.S. Bankruptcy Court approval.

The company’s motion asks the Court for authority to continue to pay employees whose services are required during the wind-down period.

On their website, the union claims a decade of mismanagement is the reason the company is liquidating. The union says problems began in the 1990s after the company went on an acquisition spree that more than doubled the company’s production plants and employee count that was followed by a restructuring resulting in declining income and increasing debt.


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