The Commercial-News, Danville, IL

Local News

November 16, 2012

Hostess forces store closure

Butternut Bread to lock up Tuesday

DANVILLE — A longtime bread store will close next week due to Hostess shutting down its operations. Butternut Bread, 11 E. Liberty Lane, will be closing on Tuesday, a casualty of Hostess’ bankruptcy.

About 10 people locally will lose their jobs, including three clerks and 10 drivers.

Starting today, everything is 50 percent off at the store.

Clerk Andrea Pratt said if the store stays open its regular hours on Tuesday, it will close at 7 p.m. Pratt has worked at the store for five years.

“I knew what was going on. They prepared us,” she said about the store closing.

She said signs will go up on Saturday informing customers about the closure, but Pratt said she’s been telling them the sad news already. Pratt said she’s not sure what she will do for employment now.

The store has been on Liberty Lane for at least 15 years, Pratt estimated.

Customer Marianne Venute said she’s sad about the closing. She shopped at the store for specific items, such as fig bars, breadsticks and cupcakes. Hostess cupcakes are a favorite of hers since she was a little girl.

“They are a staple in my life,” she said.

Locally in 2007, another bread store, the Sunbeam bread store, closed on Gilbert Street.

According to Hostess Brands’ website, “We are sorry to announce that Hostess Brands, Inc. has been forced by a Bakers Union strike to shut down all operations and sell all company assets. Thank you for all of your loyalty and support over the years.”

According to a Hostess press release, Hostess Brands Inc. on Friday announced that it is winding down operations and has filed a motion with the U.S. Bankruptcy Court seeking permission to close its business and sell its assets, including its iconic brands and facilities.

Bakery operations have been suspended at all plants. Delivery of products will continue and Hostess Brands retail stores will remain open for several days in order to sell already-baked products.

The board of directors authorized the wind down of Hostess Brands to preserve and maximize the value of the estate after one of the company’s largest unions, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), initiated a nationwide strike that crippled the company’s ability to produce and deliver products at multiple facilities.

On Monday, Hostess Brands permanently closed three plants as a result of the work stoppage. On Wednesday, the company announced it would be forced to liquidate if sufficient employees did not return to work to restore normal operations on Thursday. The company determined on Thursday night that an insufficient number of employees had returned to work to enable the restoration of normal operations.

The BCTGM in September rejected a last, best and final offer from Hostess Brands designed to lower costs so that the company could attract new financing and emerge from Chapter 11. Hostess Brands then received court authority on Oct. 3 to unilaterally impose changes to the BCTGM’s collective bargaining agreements.

Hostess Brands is unprofitable under its current cost structure, much of which is determined by union wages and pension costs. The offer to the BCTGM included wage, benefit and work rule concessions but also gave Hostess Brands’ 12 unions a 25 percent ownership stake in the company, representation on its board of directors and $100 million in reorganized Hostess Brands’ debt.

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” said Gregory F. Rayburn, chief executive officer, in the press release. “Hostess Brands will move promptly to lay off most of its 18,500-member work force and focus on selling its assets to the highest bidders.”

In addition to dozens of baking and distribution facilities around the country, Hostess Brands will sell its popular brands, including Hostess, Drakes and Dolly Madison, which make iconic cake products such as Twinkies, CupCakes, Ding Dongs, Ho Ho’s, Sno Balls and Donettes. Bread brands to be sold include Wonder, Nature’s Pride, Merita, Home Pride, Butternut and Beefsteak, among others.

The wind down means the closure of 33 bakeries, 565 distribution centers, about 5,500 delivery routes and 570 bakery outlet stores throughout the United States.

The company asked the court for authority to continue to pay employees whose services are required during the wind-down period.

Most employees who lose their jobs should be eligible for government-provided unemployment benefits.

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