Hostess has fired 15,000 employees on Thursday to start the liquidation process after the Twinkies maker won interim court approval to shut down and sell its assets.
The popular baking company was given permission to close during a hearing in White Plains, New York, on Wednesday, reports Bloomberg BusinessWeek.
The request was approved by US Bankruptcy Judge Robert Drain. After the hearing, Hostess Chief Executive Officer Gregory Rayburn stated that 15,000 workers will be fired immediately so that they can start receiving unemployment benefits.
Financial adviser Joshua Scherer of Perella Weinburg Partners LP believes that the sale of Hostess’ assets may generate around $1 billion. Drain also approved going-out-of business sales at the company’s retail outlets. They will also be allowed to return excess ingredients and packaging.
Final approval of Hostess’ wind-down plan will be considered on November 29. The Twinkies maker will also seek court approval soon to sell major assets, like its brands.
Reuters notes that Hostess is firing 15,000 employees immediately and will keep the remaining 3,200 for the short-term to help clean equipment and close up the factories to get them ready for sale. The company expects that they will only need 200 employees by late March.
In speaking about the hearing and firing workers, Rayburn stated that the move will help preserve the laid-off employees’ ability to get unemployment benefits. The CEO stated:
“I need to maximize the value of the estate, but I need to do the best I can for my employees.”
The Twinkies maker has been fighting with its second largest union for the past few months over a new contract that the workers believe is unfair. They went on strike on November 9, a move that resulted in the company closing their doors.
Do you believe it is right for Hostess to fire 15,000 employees now, or should they still attempt to work out a deal with the union and avoid shutting down?