Hostess warns of liquidation, possible layoffs
IRVING, TEXAS — Hostess Brands, Inc. this week issued several notices under the federal Worker Adjustment and Retraining Notification Act (WARN) alerting all 18,000 of its employees across the United States that it may have to shut down and liquidate its business in as soon as 60 days if certain conditions transpire as part of its Chapter 11 bankruptcy reorganization.
In its letter to the Texas Workforce Commission, Hostess said that while its primary focus is to complete its restructuring and emerge from Chapter 11 as a viable company, “it is possible that, despite our best efforts, certain events may occur that would require Hostess to sell all or portions of its business and/or wind down its operations and liquidate.”
Hostess outlined several events that may occur, including:
• The board of directors authorizes, or seeks court authorization for, the pursuit of a sale of all or a substantial portion of all of Hostess’ assets;
• The board of directors authorizes, or seeks court authorization for, Hostess to stop pursuing the restructuring of its business;
• More than 20% of Hostess’ aggregate workforce is laid off after Jan. 11, 2012;
• Hostess receives an unsatisfactory resolution of its pending motion before the bankruptcy court regarding certain modifications to its collective bargaining agreements with the bakers and/or the Teamsters;
• There is a strike, walkout, lockout, slowdown or other work stoppage that is likely to have a material adverse effect on Hostess; or
• Hostess seeks bankruptcy approval to commence a sale of property while in bankruptcy, which accounts for more than 20% of Hostess’ consolidated net sales as reported on Hostess’ financial statements for the 12-month period preceding Jan. 11, 2012.
“The conditional WARN notices were sent to alert employees that a sale or wind down of the company is possible in the future,” said Erik Halvorson, a spokesman for Hostess Brands. “However, there are no immediate actions being taken. Our goal is to emerge from bankruptcy as a growing company with a strong future — one that continues to provide good jobs with competitive wages and benefits.”