In good news for people who don’t want to die prematurely because of their diet, Hostess Foods, makers of Twinkies, Ding Dongs, Sno Balls and other inedible confectionaries, will liquidate the company, which is currently suffering through a labor strike.

In a statement, Hostess said its bakery operations have been suspended at all plants and that it would lay off most of its 18,500 workers to focus on selling its assets. It said it has filed a motion with the U.S. Bankruptcy Court seeking permission to close its business and sell its assets, including 33 bakeries and 565 distribution centers.

CEO and chairman Gregory F. Rayburn told CNBC that he was hopeful the company could sell its brands [...]

“The Board of Directors authorized the wind down of Hostess Brands to preserve and maximize the value of the estate after one of the company’s largest unions, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), initiated a nationwide strike that crippled the company’s ability to produce and deliver products at multiple facilities,” Hostess said in the statement.

You can read the Hostess statement here.

Hostess has apparently not kept up with market share – with such good products like Twinkies and Wonder Bread, imagine! – but as you see above, the real trigger for this liquidation was the strike. This is the second Hostess bankruptcy since 2004. The BCTGM union took multiple concessions in the first bankruptcy, and offered multiple concessions (I’d tell you exactly what they are but apparently they’re having bandwidth issues at their site today) on wages and benefits this time around. But the contract the company tried to unilaterally impose was so bad, with a 27-32% wage cut and benefit slashes and the elimination of the eight-hour workday, that 92% of workers rejected it. And after the strike initiated, Hostess moved right to shutting down the company rather than working with the union on a resolution.

In fact, Wall Street hedge funds and private equity firms own Hostess brands, and they took massive bonuses and payouts over the past eight years or so. They dumped the company pensions, unilaterally stopped making pension payments that would have totaled $160 million, and plan to pay themselves with the sale of the liquidated assets of the company. Their current CEO’s main credential for the job is his “expertise in corporate liquidations,” according to the union (he’s also seen his pay triple).

This is an object lesson in how management looks at labor relations these days. Workers are expected to take their lumps, and if they protest, management will just blow up the company. And the owners will still make a profit. This is Romneyism and Bainism writ large. AFL-CIO President Rich Trumka reacted today:

What’s happening with Hostess Brands is a microcosm of what’s wrong with America, as Bain-style Wall Street vultures make themselves rich by making America poor. Crony capitalism and consistently poor management drove Hostess into the ground, but its workers are paying the price. These workers, who consistently make great products Americans love and have offered multiple concessions, want their company to succeed. They have bravely taken a stand against the corporate race-to-the-bottom. And now they and their communities are suffering the tragedy of a needless layoff. This is wrong. It has to stop. It’s wrecking America.

Outside of “great products Americans love,” I agree. And more broadly, this is what happens when corporate profits get disconnected from the viability of the companies and brands they own.

UPDATE: More from Dean Baker about the private equity-stripping of Hostess. A sample:

Hostess remained in bankruptcy for five years until it was brought out of bankruptcy in February of 2009 by Ripplewood Holdings, a private equity company. Remarkably, it exited bankruptcy with nearly $670 million in debt, almost 50 percent more than the $450 million it owed when it went into bankruptcy.

Usually companies use bankruptcy to shed debt. With Hostess the opposite was true. This meant that Ripplewood was taking a heavily leveraged gamble. If the company survived, it would get a very high return on its investment. However there was a strong likelihood that the company would not be able to make it given its extraordinary debt burden and the weakness of the economy.

And Ripplewood, of course, forced concessions on workers (using a second bankruptcy process) while taking salaries and bonuses for themselves.