Twinkies maker Hostess going out of business

Nearly 18,500 workers will lose their jobs as the company succumbs to the crippling effects of a nationwide union strike.

By MSNMoney partner Nov 16, 2012 9:37AM
File photo of a twin pack of Hostess Twinkies and CupCakes, PAUL J. RICHARDS, AFP, Getty ImagesBy Tanya Agrawal, Reuters

Hostess Brands, the bankrupt maker of Twinkies and Wonder Bread, said it has sought court permission to go out of business after failing to get wage and benefit cuts from thousands of its striking bakery workers.

Hostess said a national strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union that began last week had crippled its ability to produce and deliver products at several facilities.

The liquidation of the company will mean that most of its 18,500 employees will lose their jobs, Hostess said on Friday.

The 82-year-old company said it took the decision to shut down after determining that not enough employees had returned to work by a deadline on Thursday.

The company, which filed for bankruptcy in January for the second time since 2004, said it had filed a motion with U.S. Bankruptcy Judge Robert Drain in White Plains, New York, for permission to shut down and sell assets.

The Irving, Texas, company has 565 distribution centers and 570 bakery outlet stores, as well as the 33 bakeries. Its brands include Wonder, Nature's Pride, Dolly Madison, Drake's, Butternut, Home Pride and Merita, but it is probably best known for Twinkies -- basically a cream-filled sponge cake.

"We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike," Chief Executive Gregory Rayburn said in a statement.

"Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders," Rayburn added.

Union President Frank Hurt said on Thursday that the crisis at the company was the "result of nearly a decade of financial and operational mismanagement" and that management was trying to make union workers the scapegoats for a plan by Wall Street investors to sell Hostess.

Hostess said its debtor-in-possession lenders had agreed to allow the it to continue to have access to $75 million to fund the wind-down process.

"There's no way to soften the fact that this will hurt every Hostess Brands employee. All Hostess Brands employees will eventually lose their jobs - some sooner than others," Rayburn said in a letter to employees.

The company has canceled all orders in process with its suppliers and said any product in transit would be returned to the shipper.

In its filing with the court, the company said it would have incurred a loss of between $7.5 million and $9.5 million from November 9 to November 19 in lost sales and increased costs.

"These losses and other factors, including increased vendor payment terms contraction, have resulted in a significant weakening of the debtors' cash position and, if continued, would soon result in the debtors completely running out of cash," it said.

Hostess had already reached agreement on pay and benefit cuts with the International Brotherhood of Teamsters, its largest union.
Nov 16, 2012 10:16AM
I'm sure there are plenty of out of work non-union workers that would gladly take the jobs.
Nov 16, 2012 10:17AM
Strike to avoid a pay cut, but end up bankrupting your employer.  Smart move.
Nov 16, 2012 10:14AM
And Unions take another toll on the American landscape...
Nov 16, 2012 10:14AM
Well, that's what you get with organized labor.  Organized labor=organized crime.
Nov 16, 2012 10:19AM
Congrats Union, you wanted we all get nothing.
Nov 16, 2012 10:15AM
Well, it's nice to see the union held it's ground. Of course the union officials still have jobs and a paycheck.
Nov 16, 2012 10:15AM

It's hard to believe Unions are so dumb to give up a job that really pays pretty good even with concessions and would rather be unemployed? I can only imagine the cut in pay most will get when they have to take a "non union" job. Maybe they are hoping Obama will bail out yet another Union company.

Don't count on it.

Nov 16, 2012 10:18AM
I can not feel sorry for the workers as they were pushing a company that had no recourse but to close down due to the situation.  We all should be careful how we value a job that may or may not be there tomorrow...
Nov 16, 2012 10:18AM

Gee, how did that strike work out for you Bakers Union? Now you have no work to go back to. 18,500 jobs means 18,500 families without income and probably 18,500 familiaes that will be looking for government assistance of some sort.


Nov 16, 2012 10:20AM

It's about time, we get control over the unions again, they are out of control..  How dare the union tell a business what to do and not do...  Unions were great years ago, but there is no need for them any longer, this is going to be happening alot in the future.. WAY TO GO HOSTESS, don't let anyone push you around



Nov 16, 2012 10:15AM
What about the UNIONS......thank the union for all those employees who will no longer get a pay check....more relying on the goverment.....what a shame!
Nov 16, 2012 10:15AM
Quick!  Hit the stores and buy all the Twinkies!
Nov 16, 2012 10:17AM
YAY! Another "win" for the union scum!
Nov 16, 2012 10:16AM

Twinkies need a bailout more than GM or Chrysler did!!!


This is the one case where we really need Obamanomics to step in.

Our children may be in debt forever----

But our grandchildren should not be deprived of Twinkies.

Nov 16, 2012 10:30AM
I was raised where both of my parents were union workers and when I started working, I joined the union. I have seen first hand how the unions destroy companies. They have their own selfish agenda and do not listen to the workers but dictate to them. They were needed back in the day, but now are just a money hungry organization that has outlived their usefulness. They need to go away.

This is typical union rhetoric that tells the people it was not the unions fault that they will be out of work now. The union does not care, they will get dues from someone else and move on.

"Union President Frank Hurt said on Thursday that the crisis at the company was the "result of nearly a decade of financial and operational mismanagement" and that management was trying to make union workers the scapegoats for a plan by Wall Street investors to sell Hostess."

The result of the shut down is due to the greed of the union and the union members that have a mentality of entitlement, that company owes them something. Hostess should shut down, wait the amount of time it needs to in order to re-open without a union and after those 18,500 people have gone without  job for a while and realize how good they had it there, they will flood back in there with the cut in pay and befits that the company had originally asked for to try and stay open. Then and only then will those people realize that the union is nothing more than an organization committed to stealing money from the people it is suppose to represent.

Nov 16, 2012 10:14AM
Nov 16, 2012 10:16AM
Poor Tallahassee; what's he to do now?
Nov 16, 2012 10:24AM

Lets see...

Boeing just announced the layoff of 36,000 people due to obama military cuts.

Lockeed just announced the layoff of 123,000 people due to obama military cuts

Northrop Grumman is preparing an announcement of a massive layoff due to obama military cuts

Hostess is going out of business and laying off 18,500 people due to obama union thuggary

I think the list will continue to grow rapidly in the next few months.



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