Hostess closing OK’d by judge

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WHITE PLAINS, N.Y. (CNNMoney) — Time finally ran out for Hostess Brands on Wednesday, as a bankruptcy judge gave preliminary approval to the baker’s request to liquidate the 82-year old company.

A last-ditch attempt to mediate a pay-and-benefits dispute between the company and its Bakery Workers union failed.

The decision by Judge Robert Drain sets the stage for the company to start selling its assets — including its bakeries, brands and recipes — to the highest bidders. The move will likely cost 18,500 workers their jobs.

“Sadly, the parties were not able to come to an agreement,” said Drain.

Hostess, maker of such beloved products as Twinkies, Wonder Bread and Drake’s snacks, announced Tuesday the mediation efforts had failed to produce a deal.

The company’s operations have been closed since last Friday. Hostess’ CEO and attorneys previously said that reaching a deal to restart the company’s network of 33 bakeries and 565 distribution centers would be difficult due to the financial damage done by the strike that started Nov. 9.

Drain scheduled another hearing next week. At that time, he will consider Hostess Brands’ request 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. Hostess 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 Justice Department’s bankruptcy trustee in the case has also filed an objection to the bonus plan.

The Bakery Workers union 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.”

As a result of Drain’s ruling, 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