Hostess Mediation Talks Fail

Hostess Brands Inc., maker of Twinkies and Wonder Bread, today will ask a judge to liquidate its operations after last-minute talks to reach a pact with its bakers' union failed.

A bankruptcy court judge in White Plains, N.Y., had sent the two parties into talks on Tuesday, saying it was worth one more effort to save the firm's 18,000 jobs.

The renewed talks between Hostess and The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union came after the company declared last week that it would move to wind down its business and start selling off its assets in bankruptcy court. The company cited a crippling strike that was started on Nov. 9 by the union, which represents 30 percent of Hostess workers.

After making its case to liquidate on Monday, the bankruptcy court judge noted that the two sides hadn't yet tried resolving their differences through private mediation. The judge noted that 18,000 jobs were on the line and urged the company and union to try to resolve their differences.

In a statement late Tuesday, Hostess said it would not comment on the breakdown in talks other than to say that mediation "was unsuccessful." A lawyer for the bakers union said he had no comment, citing mediation ground rules.

Hostess had requested Judge Robert Drain of the U.S. Bankruptcy Court, who is overseeing the company's bankruptcy, to be able to liquidate its assets after a dispute with the BCTGM.

"Many people, myself included, have serious questions as to the logic behind this strike," said Drain. "Not to have gone through that step leaves a huge question mark in this case."

Hostess had announced on Friday that it will liquidate because not enough striking employees returned to work by a Thursday evening deadline set by the company. But on Monday, Gregory F. Rayburn, chief executive officer, told ABC News, "I think we'll find buyers."

A handful of companies have reportedly expressed interest in buying Hostess Brands, including private equity firm Sun Capital Partners Inc., based in Boca Raton. Sun Capital did not immediately return a request for comment.

"We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike," Rayburn said in a statement on Friday. "Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders."

In Photos: Famous Hostess Products

"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 Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), initiated a nationwide strike that crippled the Company's ability to produce and deliver products at multiple facilities," the company said in a statement.

"We simply do not have the financial resources to survive an ongoing national strike," Rayburn said in a statement Wednesday. "Therefore, if sufficient employees do not return to work by 5 p.m., EST, on Thursday to restore normal operations, we will be forced to immediately move to liquidate the entire company, which will result in the loss of nearly 18,000 jobs."

A 5 p.m. deadline came and went without workers returning on Thursday night.

The strikes began on Nov. 9, when the company imposed a contract that would cut workers' wages by 8 percent. The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) said the contract would also cut benefits by 27 to 32 percent.

Hostess, which is privately owned by investment firms, has struggled in recent years with two bankruptcy filings. The company said it "has done everything in its power to pursue a reorganization of its business as a going concern, including spending the better part of 18 months negotiating with its key constituents to obtain a consensual agreement."

"Hostess Brands is making a mockery of the labor relations system that has been in place for nearly 100 years," union president Hurt said in a statement earlier this week. "Our members are not just striking for themselves, but for all unionized workers across North America who are covered by collective bargaining agreements."

The union, which represents more than 80,000 industry workers, maintains that the company's policies will bring its members back to workplace standards of the 1950s.

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.

ABC News' David Wright and Alex Stone contributed to this report. The Associated Press contributed to this report.

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