Hostess Brands, a producer of bakery products in the US, has received clearance from the US Bankruptcy Court in New York to shut down the business and sell its assets.
US Bankruptcy Judge Robert Drain authorized the liquidation process after Hostess Brands and the company's largest union - the Bakery, Confectionary, Tobacco and Grain Millers Union (BCTGM) were unable to reach an agreement during a mediation session on 20 November, which was aimed at saving the company.
While 18,500 employees will lose their jobs eventually, the company plans to retain 3,200 employees to assist in the initial phase of the liquidation.
The liquidation, which is expected to be completed in one year, will lead to the closure of 33 bakeries, 565 distribution centres, approximately 5,500 delivery routes and 570 bakery outlets across the US.The company is planning to sell its brands including Hostess, Drakes and Dolly Madison, Twinkies, CupCakes, Ding Dongs, Wonder, and Nature's Pride, among others.
Potential bidders for the brands may include US food company Flower Foods, US private equity firm Metropoulos, and Mexican food company Grupo Bimbo.
Hostess Brands, which has been affected by increasing debts, soaring labour costs and the changing tastes of consumers, filed for bankruptcy in January 2012 for the second time in its history, declaring assets of $982m and debt of $1.43bn.
