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Hostess warns striking workers of liquidation

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NEW YORK (AP) - Hostess Brands Inc. is warning striking employees that it will move to liquidate the company if plant operations don't return to normal levels by Thursday evening.

The maker of Twinkies, Ding Dongs and Wonder Bread says it will file a motion in U.S. Bankruptcy Court to shutter operations if enough workers don't return by 5 p.m. EST. That would result in the loss of about 18,000 jobs.

Hostess, based in Irving, Texas, has already reached a contract agreement with its largest union, the International Brotherhood of Teamsters. But thousands of members in its second biggest union went on strike late last week after rejecting a contract offer that cut wages and benefits in September. Officials for the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union say the company stopped contributing to workers' pensions last year.

Lance Ignon, a spokesman for Hostess, says that production at about a dozen of the company's 33 plants has been seriously affected by the strike. He said that a decision on whether Hostess will have to move to liquidate the company may not come until Friday morning after it's had a chance to assess plant operations at the end of Thursday.

In an interview with Fox Business, Hostess CEO Gregory Rayburn said many workers have already crossed picket lines this week to go back to work despite warnings by union leadership that they'd be fined.

"The problem is we don't have enough crossing those lines to maintain normal production," said Rayburn, who first joined Hostess earlier this year as a restructuring expert.

A representative for the bakery workers union did not respond to request for comment. The Teamsters meanwhile is urging the smaller union to hold a secret ballot on whether to continue striking. Citing its financial experts who had access to the company's books, the Teamsters say that Hostess' warning of liquidation is "not an empty threat or a negotiating tactic" but a certain outcome if workers continue striking.

The Teamsters also noted that the strike put its union members in the "horrible position" of deciding whether to cross picket lines.

Hostess, a privately held company, filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade. The company cited increasing pension and medical costs for employees as one of the drivers behind its latest filing. Hostess has argued that workers must make concessions for it to exit bankruptcy and improve its financial position.

The company, founded in 1930, is fighting battles beyond labor costs, however. Competition is increasing in the snack space and Americans are increasingly conscious about healthy eating. Hostess also makes Dolly Madison, Drake's and Nature's Pride snacks.

Hostess said it will file the motion to liquidate Friday, with a hearing scheduled for Monday. If the motion is granted, Hostess would begin closing operations as early as Tuesday.

Copyright Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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