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Hostess says talks to avert shutdown fail

Hostess Brands Inc.'s last-ditch effort to stay in business failed Tuesday.

The maker of Twinkies, Ding Dongs and Wonder bread said late Tuesday that it failed to reach an agreement with its second-biggest union. As a result, Hostess plans to continue with a hearing Wednesday in which a bankruptcy court judge will decide if the company can shutter its operations.

The renewed talks between Irving, Texas-based Hostess and The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union came after the company declared last week that it would move to wind down its business and start selling off its assets in bankruptcy court. The company cited a crippling strike started on Nov. 9 by the union, which represents 30 percent of Hostess workers.

After making its case to liquidate on Monday, the bankruptcy judge hearing the case noted that the two sides hadn't yet tried resolving their differences through private mediation. The judge noted that 18,000 jobs were on the line and urged the company and union to try to resolve their differences. Both sides agreed to hold mediation proceedings Tuesday.

In a statement late Tuesday, Hostess said it would not comment on the breakdown in talks other than to say that mediation "was unsuccessful."

Hostess shut down its three dozen plants late last week after it said the strike by the bakers union hurt its ability to maintain normal production. The bakers union says the company's demise was the result of years of mismanagement, and that workers have already given steep concessions over the years.

Hostess, weighed down by management turmoil, rising labor costs and the changing tastes of Americans, is making its second trip through Chapter 11 bankruptcy restructuring.

The company's announcement last week that it would move to liquidate prompted a rush on Hostess treats across the country, with many businesses selling out of Twinkies within hours.

Even if Hostess goes out of business, its popular brands will likely find a second life after being snapped up by buyers. The company says several potential buyers have expressed interest in the brands. Although Hostess' sales have been declining in recent years, the company still does about $2.5 billion in business each year. Twinkies alone brought in $68 million so far this year.

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