Wonder Bread and Twinkie-maker Hostess Brands said Monday that it could go into liquidation if its bakers continue striking in protest against wage and benefit cuts imposed in bankruptcy court.
Hostess Brands have been in and out of bankruptcy and was already struggling from a high cost structure and sluggish consumer demand for its products.
The new contract cuts salaries across the company by 8 percent in the first year of the five-year agreement. Salaries then bump up 3 percent in the next three years and 1 percent in the final year.
"We'll be selling the brands and as much of the infrastructure as we can," said company spokesman Lance Ignon, according to Reuters. "There is value in the brands. But some bakeries will never open again as bakeries."
The Irving, Texas-based company said the liquidation would mean that most of its 18,500 employees would lose their jobs. Hostess immediately suspended operations at all of its 33 plants across the United States as it moves to start selling assets.
The company said it was closing bakeries in Seattle, St. Louis and Cincinnati in response to the strike, cutting 627 jobs in total. The bakers' strike, which began last week, continued Monday at around 24 of Hostess' 36 plants.
Hostess CEO Greg Rayburn said the firm could close more bakeries or even move into liquidation if workers don't return to their jobs soon. Hostess filed for bankruptcy in January, its second trip to bankruptcy court since 2004.
