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.
3428Comments
Nov 16, 2012 10:18AM
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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 10:17AM
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Strike to avoid a pay cut, but end up bankrupting your employer.  Smart move.
Nov 16, 2012 10:17AM
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Looks like Obama is already starting to crumble the economy once again. if companies cant pay the price they just go out of business and all the employees suffer..

 

Look out America this is what is coming

 

 

Nov 16, 2012 10:17AM
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YAY! Another "win" for the union scum!
Nov 16, 2012 10:17AM
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Well we can always go to China for Twinkies!
Nov 16, 2012 10:16AM
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Poor Tallahassee; what's he to do now?
Nov 16, 2012 10:16AM
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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 10:16AM
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Just another way for union busting, as if the top brass will take pay-cuts, I guess their 6 and 7 figures   are not to blame. Hang tough workers, it's time we all take a stand against these corp jerks.
Nov 16, 2012 10:16AM
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I'm sure there are plenty of out of work non-union workers that would gladly take the jobs.
Nov 16, 2012 10:15AM
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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
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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
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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 10:15AM
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Quick!  Hit the stores and buy all the Twinkies!
Nov 16, 2012 10:14AM
Nov 16, 2012 10:14AM
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Well, that's what you get with organized labor.  Organized labor=organized crime.
Nov 16, 2012 10:14AM
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And Unions take another toll on the American landscape...
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