The fate of the former Hostess Brands Inc. bakery in Northwood will be decided Thursday at a court-ordered auction in New York, but the fate of about 160 workers who were employed there until the company went into bankruptcy liquidation in November could remain unknown for several months.
At the auction, slated for 10 a.m., the bread-making operations of Hostess that include its Wonder, Nature’s Pride, Merita, Home Pride, and Butternut brands is expected to go to Flowers Foods Inc. of Thomasville, Ga., the second-largest maker of packaged bakery foods in the United States with sales over $3 billion. In January, Flowers Foods signed a purchase agreement to buy the Hostess bread brands, 20 bakeries, and 38 depots for a cost of $360 million.
The deal would include the baking operation in Northwood, which is considered state-of-the-art, but not a bakery in Defiance that had employed 190 workers.
Flowers Foods’ $360 million offer is a “stalkin- horse bid,” that is, one chosen by the debtor as the best bid that provides a fair price for the assets at auction. At least one other bid for the bread-making operations has been received.
According to documents filed in U.S. Bankruptcy Court for the southern district of New York, when Hostess Brands filed for Chapter 7 liquidation, all of its 18,000 workers were terminated and union contracts covering 5,000 workers represented by the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union were ended. The bankruptcy proceedings do not provide any succession clauses under which the union workers would retain their jobs under new ownership.
David Durkee, president of the international union, issued a statement indicating the union was working hard to have its members rehired at the bakeries once they reopen.
“While we don’t know if the new owner will be Flowers Foods Inc. ... or another party, our goal is to work with the new owner to preserve jobs and the legacy of these timeless bread brands,” Mr. Durkee said. “We’'ve worked with Flowers on occasion in the past, and would hope to continue a positive working relationship should they become the new owners. The [union] has a well-trained, sizable work force with decades of eeeeeeeeeeexperience and irreplaceable knowledge, and our members provide new owners the best chance of success in a seamless revival of operations.”
Union officials have said the rehiring of its members with their knowledge of the operations could allow the bakeries to be up and running in 24 hours from the time the doors reopen.
Keith Hancock, a spokesman for Flowers Foods, said it would be inappropriate for the company to talk about future hiring practices because it doesn’t know if it will have the winning bid.
“Our position is we don’t own the brands yet and it’s premature to go down that path at this point,” Mr. Hancock said. “Even if Flowers is fortunate enough to be the winning bidder, the court has to accept the bid and then there’s a Department of Justice review on the matter. So an end to the whole thing would be several months off.”
Bob Anderson, administrator for the city of Northwood, said the city is hoping that the former workers at the bakery will be rehired, along with the former Teamster drivers who operated a fleet of delivery trucks.
“There’s a couple dozen of [Hostess’] delivery trucks just sitting there at its closed outlet store,” Mr. Anderson said. “I’d like to see them open that store again and I think we’ve counted on workers being rehired as a part of any deal,” he added.
But Mr. Anderson said he has not had any contact with Hostess or, more importantly, with Flowers Foods. “I would think the workers would have a chance [to get their jobs back]. They know where stuff is and what to do inside there. I would think Flowers would probably be interested in the people who worked there before,” he said.
Contact Jon Chavez at: email@example.com or 419-724-6128.