The judge overseeing Hostess Brands declined to approve the company’s liquidation Monday and asked management and the bakers union to enter mediation today to explain the strike that the maker of Twinkies and Wonder Bread said forced it to shut down.
U.S. Bankruptcy Judge Robert Drain said at a hearing in White Plains, N.Y., that there are “serious questions as to the logic behind the decision to strike.” Hostess and the bakers union agreed to Drain’s request to enter confidential mediation under his supervision.
“To me, not to have gone through that step leaves a huge question mark over this case, which I think will only be answered in litigation,” Drain said.
Hostess hasn’t spoken with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union since August, said Heather Lennox, a lawyer for the company.
Hostess is seeking permission from Drain to pay bonuses to key managers while closing operations that will leave most of its 18,500 workers jobless.
Any agreement arising from the mediation would probably come too late to save the company, Lennox said.
The hearing to consider Hostess’s request to wind down was postponed until Wednesday.
Hostess said last week that it would shut down, claiming that a weeklong strike by the bakers union forced liquidation.
The union blamed management’s concession demands, while some employees blamed both sides.
Supermarkets in the Puget Sound area were reporting that they were nearly out of Hostess products, particularly the iconic Twinkies.
Staff writer John Gillie contributed to this report.
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