DALLAS (CN) - Twinkies are back on life support after a bankruptcy judge on Monday ordered Hostess Brands and its striking union to enter into mediation.
Hostess Brands and the union-the Bakery, Confectionery, Tobacco Workers and Grain Millers Union-agreed to mediation that, for now, prevents the liquidation of the 82-year-old manufacturer of Twinkies and Wonder Bread.
Hostess planned to ask U.S. Bankruptcy Judge Robert Drain to liquidate the company at a hearing in Manhattan Bankruptcy Court on Monday after union members failed to end their strike last week.
But Drain prodded the parties to a last-minute mediation of their differences. The parties agreed to hold a confidential mediation session today (Tuesday).
As a result, the company's motion to wind down the company and sell all of its assets is on hold until Wednesday morning, the company said in a statement.
Hostess filed for Chapter 11 bankruptcy protection in January, citing its enormous debt load, pension and labor costs.
"We simply do not have the financial resources to survive an ongoing national strike," Hostess CEO Gregory F. Rayburn said last week. "It is now up to Hostess' represented employees and Frank Hurt, their international president, to decide if they want to call off the strike and save this company, or cause massive financial harm to thousands of employees and their families."
The union strike began Nov. 9.
Hostess said in a statement that it has done everything it can to reorganize its business, including spending 18 months negotiating with its key constituents.
"As previously disclosed, the company has obtained the support of its largest union, the International Brotherhood of Teamsters, and its lenders," the company said. "With the support of the BCTGM, Hostess believes it would successfully reorganize."
In response, the BCTGM said on Friday that Hostess' demise was "a decade in the making," that six management teams in the span of eight years failed to make the company profitable.
"Our members were aware that while the company was descending into bankruptcy and demanding deep concessions, the top ten executives of the company were rewarding themselves with lavish compensation increases, with the then CEO receiving a 300 percent increase," the union said in a statement. "Our members decided they were not going to take any more abuse from a company they have given so much to for so many years."
The union said its members refused to agree to another round of wage and benefit cuts and give up their pensions, to see yet another management team fail, while "vulture" capitalists and "restructuring specialists" walk away with millions of dollars.
"While Hostess management wants to blame our members for the demise of the company, the truth is that had it not been for the valiant efforts of our members over the last eight years, including accepting significant wage and benefit concessions after the first bankruptcy, this company would have gone out of business long ago," the union said.
Rayburn told The Associated Press that the company and the union have just 24 hours to come to terms, as it is costing $1 million a day in overhead costs to wind down operations.
Even if a contract is reached, it is not clear whether all 33 Hostess plants will resume work.
Hostess, maker of Ding Dongs, Ho Ho's, Sno-Balls and other cakes, said it may be able to sell the popular brands to other bakers, even if Hostess dies.
After the liquidation announcement Friday, retailers around the country reported selling out of Hostess products within hours.
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