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South Carolina bankruptcy: Hostess survives, for the moment

South Carolina Twinkie lovers may be happy to know that Hostess has agreed to undergo mediation with its second largest union. The judge overseeing the bankruptcy proceedings noticed the company had not taken that important step and recommended mediation in an effort to resolve their differences before the liquidation process escalates. This is an important development for the company because it means they could still have the chance to keep their doors open.

The iconic company and creator of such delights as Ho Ho's, Wonder Bread and Ding Dongs announced their intention to liquidate and sell their assets through the bankruptcy courts. The company had already struggled financially for many years, but was crippled when workers who disagreed with a new contract decided to go on strike. If the mediation fails, the company is set to continue its liquidation.

The company has already closed over 30 plants and sent approximately 18,000 workers home. Even if the company and union manage to come to an agreement, it may not be enough to save all of their plants. This is their second attempt at bankruptcy, but the company decided they could not survive through Chapter 11 restructuring. A difficult decision had to be made and they decided to close down their business and sell of remaining assets.

Hostess offered workers a new contract which decreased their salaries, reduced their benefits and would have cut pension costs by $25 million. Workers refused the deal and the already struggling Hostess was forced to make a bankruptcy decision. Whether the mediation will be successful is unknown. South Carolina residents may wish to look into their options and contacting legal counsel if they find themselves in a situation where they feel asset liquidation is the best plan of action.

Source: CTPost.com, "Twinkies maker Hostess lives at least another day," Nov. 19, 2012

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