CARS HOMES JOBS

A bake sale of mammoth proportions

Thursday, December 6, 2012
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The shelving is disassembled and stacked neatly along a wall, just as directed.

The blinds on the front windows are drawn, but you can look inside through the glass entry doors, where a “This Store Is Now Closed” notice is taped.

The message conflicts with the one on the pylon sign outside the Wonder Bread/Hostess Cakes bakery outlet store in Latham, located near the Kmart at the crest of the Troy-Schenectady Road hill that rises from Watervliet. On Tuesday it said, “Yes We R Open.”

Tom Becker, a spokesman for Hostess Brands Inc., says the site, a combination retail store and depot, closed around Thanksgiving, about a week after the company — famous for Ho Hos, Ding Dongs and Twinkies — announced it would wind down operations.

This isn’t a column about Hostess’ snack cakes, which, with a deep fan base, are certain to get a second chance with a new owner. Rather, it’s about the mechanics of closing down 36 bakeries, 565 distribution centers, some 5,500 delivery routes and 570 bakery outlet stores spread across the country.

Where do you start? For Hostess, it’s all detailed in “The Winddown Plan,” filed in U.S. Bankruptcy Court in White Plains.

It’s there you can read about how shelves in the retail stores “will be disassembled and positioned at the back” — as was done in Latham — and how each store is to be “broom cleaned” before closing. Two workers — a manager and a clerk — will oversee going-out-of-business sales at the stores, but the plan says “no retail store Winddown personnel will be required after Week Four.” After all, no new breads or snack cakes will be baked, so the stores can be shuttered quickly.

Hostess initiated the shutdown Nov. 16, a week after the Bakery, Confectionary, Tobacco and Grain Millers Union — one of 12 representing company workers — went out on strike. That “crippled” operations, Hostess said in a statement, “at a time when the company lacked the financial resources to survive a significant labor action.”

Hostess had been racing the clock since January, when it sought bankruptcy court protection to reorganize its finances, which Bloomberg News pegged at about $982 million in assets and $1.4 billion in liabilities. Hostess cited the weak economy and legacy labor costs for the filing; it subsequently worked to secure new contracts with the unions.

But when the bakers and the company failed to reach an accord in 11th-hour mediation, Hostess asked the court to approve its plan to liquidate; the final OK came last week.

Most of the company’s 18,500 workers were terminated immediately, but close to 3,200 — including 19 senior managers — will be retained to execute the closing. They will be eligible for special retention awards averaging $92,000 per executive and $1,400 per other worker, according to court documents. Keeping them is “essential to achieving a successful Winddown,” which is expected to take a year.

Anything that can be sold will be — like the store shelving in Latham, fleets of panel trucks, production equipment and an estimated $29.3 million in “excess ingredients” (flour, sugar, corn starch) at the bakeries.

“The desired outcome of the Winddown is the sale of groups of assets that can be operated on a going-concern basis,” the documents state. The sales, just through February, are projected to total $144.7 million

That makes for one heck of a big bake sale.

 
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