Hostess Going Out Of Business 2012 - News Update: Negotiations Fail Between Executives and Union, Company to Begin Liquidation

Time to stock up on Twinkies, Ding Dongs, HoHos and chocolate cupcakes again: Hostess is going under. Again.

Court-ordered mediation between executives and a union representing 5,000 Hostess workers fell through on Wednesday, setting the stage for the company's liquidation.

Hostess will shut down over 300 plants, fire all 18,500 of its workers and begin selling off its assets and brands.

The company is facing opposition from the Department of Justice over its plan to pay executives up to 75 percent of their annual salary as part of its bankruptcy process.

The Baker, Confectionery, Tobacco Workers and Grain Millers' International Union had been on strike at Hostess plants since Nov. 9 over what they said are exorbitant executive bonuses and a failure to modernize plant infrastructure or brand identity. Pay for over a dozen executives at the company increased by between 35 and 80 percent last year, just before filing for bankruptcy for the second time in less than a decade.

Hostess executives countered that they were unable to continue to support a unionized workforce and plan to cut pensions by 75 percent, and reduce health benefits by 17 percent.

The closed door negotiations took place on Tuesday, mediated by Judge Robert Drain. Hostess executives and representatives of the BCTWGM union attended, while Hostess creditors and representatives of the Teamsters' Union (which also has members at Hostess plants) were invited.

"Unfortunately, the last-minute mediation efforts by Judge Drain were not successful," said Ken Hall, general secretary-treasurer of the Teamsters union. "This is a tragic outcome."

Hostess has filed for Chapter 11 bankruptcy, the same kind of bankruptcy it underwent in 2004. But the company's plan to pay executive bonuses doesn't sit well with the Department of Justice, which has filed an objection with the judge in charge of the proceedings, requesting the process be converted to a Chapter 7 bankruptcy.

That switch would put a court-appointed trustee in charge of the liquidation, and make any executive bonuses subject to the trustee's judgment.