Last-minute negotiations fail, Hostess to close

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NEW YORK (CNNMoney) — Time will likely run out for Hostess Brands on Wednesday, after a last-ditch mediation effort by a bankruptcy court judge failed to produce a deal between the company and its striking bakers’ union.

Check out related stories and photos from the Hostess shutdown – click here.

Judge Robert Drain, who had essentially ordered the two sides to a mediation effort he himself oversaw, is set to rule on Hostess Brands’ motion to wind down the company at a hearing in White Plains, N.Y. He adjourned a hearing on the motion Monday after saying he wanted to take one last shot at saving the 18,500 jobs at the company.

But Hostess, maker of such beloved products as Twinkies, Wonder Bread and Drake’s snacks, announced Tuesday that the mediation efforts had failed to produce a deal to restart its operations. Its CEO and attorneys had previously said reaching a deal that could restart the company’s nationwide network of 33 bakeries and 565 distribution centers would be difficult due to the financial damage done by the strike that started Nov. 9.

The company announced the shutdown of its operations on Friday, and the hearing Monday had been expected to simply confirm the decision to liquidate and start the sale of its assets. Hostess Brands also has asked for approval of $1.75 million in bonuses, ranging from $7,400 to $130,500, to be paid to 19 executives to oversee the liquidation of the company. It said it needs the bonuses to make sure the executives it needs stay with the company through the end.

“The cessation of … operations is not a simple matter of turning off the lights and shutting the doors,” the company wrote in a court filing on Friday.

Unions at Hostess are on record opposing the bonus requests.

The Bakery Workers union did not comment on the failed mediation. It has repeatedly said that mismanagement and the debt placed on the company by its current and past owners were the reasons for the company’s failure, not the strike. It said its membership was overwhelmingly opposed to the wage and benefit concessions agreed to by other Hostess employees, including the majority of the 6,700 members of the Teamsters’ union at Hostess.

The Teamsters issued a statement Tuesday saying the failure of mediation and the likely liquidation of the company was a tragic outcome. It did not comment on who it blamed for the shutdown.

A statement last week blamed poor management for the shutdown, but also appeared to also criticize the bakers’ union without explicitly naming it, saying that “not all stakeholders were willing to be constructive.”

Assuming Drain approves the company’s motion, Hostess will start to sell off its assets, including its iconic brands and recipes, which could return its beloved products to store shelves at some time in the future.

On Monday, private equity firm Sun Capital Partners told Fortune that it wants to buy Hostess as a going concern. It would reopen the shuttered factories, and keep the Hostess workers and their unions. But it’s not clear Sun Capital’s offer would top those of other bidders who would simply produce the product with the bidders’ existing staff facilities, leaving the Hostess workers out of luck.