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 11:26AM
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Guess all the Republicans here once again can't Read."The company, which filed for bankruptcy in January for the second time since 2004" Hmmm I believe Bush was the president back then?  Those who think that management cant Bankrupt a company are fools. But as always you need a scapegoat. Hey this is a Texas Company maybe when they secceed from the USA the rest of the contry will come back. Just Saying
Nov 16, 2012 11:25AM
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This is the end of an american icon.  How very sad for all of us.  Why do we continue to hurt our very own employees and products?  The Hostess brand was something most of us can remember and grew up with.  Bye, Bye, Miss American Pie, in this case, our beloved Twinkie. 
Nov 16, 2012 11:25AM
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Before everyone starts dumping on labor unions do a little research. Interstate Bakeries accuried many local brands over the years. It went public, then back to private and merged with Continental Bakeries. Management made many mistakes with changing formulas and processes and new compation (think Krispy Creme) leading to the 2004 bankruptcy. In steps "Bain" style venture management companies that further drove down the brand. Todays action is an attempt by them to grab the $75,000,000.00 reserves for themselves. Leaving 18500 people and all the creditors with empty hands.
Nov 16, 2012 11:25AM
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Good bye to another union. Do you think that what you have done is helping anyone?  Sooner or later, these unions won't be able to hurt America, they will be history.
Nov 16, 2012 11:25AM
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Wait until Obamacare fully kicks in..Companies will be laying off thousands.
Nov 16, 2012 11:25AM
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While the unions are at fault for doing in the Hostess, aren't we all to blame for letting the health nuts encourage us to stop eating Twinkies???  (And, while I am at it-ruining dinner out with the stupid calories on the menu at Mc Donalds, Applebees, etc....I already know the cheeseburger is not good for me....)    Back on topic.  Unions take a big chunk of change from these people and promise them the moon and can rarely back up those promises.  Hope the Twinkie survives and hope that these 18000 plus folks figure it out and ask their union for their dues back and some sort of income to support their families....
Nov 16, 2012 11:24AM
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To all you Obama supporters you wanted hope and change well I guess you got it
Nov 16, 2012 11:24AM
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before you folks judge the  people  on  strike,  get all the facts...  emplyees were still paying on connsessions from 5yrs ago when hostess came out of  chpt. 11 for the second time!  cant speak for all of the bakeries , but the one in my area , the employees had $$ 170  per week taken out of check  for retirement acct.  but hostess kept the money.  this started 15 months ago and hostess spent every dime!!   160,000,000 $  gone!! the plant in my area had 6 different plant managers in 9 yrs. the CEO you've seen on tv doesent even work for hostess,  he's a liquidation specialest, who was contracted to help out, but  said the company was in such distress from  mismangement ,  even with added consessions, they would have had to sell off almost half of company.  i met and interviewed  CEO greg rayburn two months ago and he said  with or without strike, company would be closed and sold off before springtime.   not because of unions or non union people, but because of bad management and massive debt.   almost 800,000,000 $$ so dont fear, the twinky  will be back soon garrenteed!! 

Nov 16, 2012 11:24AM
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Greedy unions.  Now you won't have a job at all.  Only problem is the rest of us are going to pay, too, when we go to the grocery store and want to buy a Hostess filled cupcake or Twinkie.  Thanks a lot.
Nov 16, 2012 11:24AM
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the sad part is that hostess makes the best cakes!!!  better than little debbie and all the rest.  I think non-union people should take over and work for a reasonable rate and keep the company going!!  the union can keep themselves and the lost job counts!!!
Nov 16, 2012 11:24AM
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I wonder the next time i eat a twenkie will it say made in china

Nov 16, 2012 11:24AM
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Oh man, I LOVE Home Pride bread, and Hostess goodies as well, and buy them on a regular basis. : (
Nov 16, 2012 11:24AM
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I had a carpet co once, and one of my installers started this union garbage.  Two muscle men came in and strongly suggested I go ahead and sign up.  I had to do a Sears job, 1000 yards of paste down carpet, and used two union guys, who spread glue, but refused to cut in the carpet and roll it.  I lost my **** getting that job done as they stood around and smoked cigarettes, while I had to bring in my regular guys to actually install the stuff.  What a racket.  Typical Obama stuff, all the way.

Arty Bristlebrush

Nov 16, 2012 11:24AM
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Who cares !!!!   They taste terrible anyway.  They are dry,tasteless,have very,very little cream filling in them anymore. Years ago they were moist,full of the cream filling and very good.I ahve wrote Hostess many letters complaining about there product and telling them you don't honor your commercials," the ones with racoon,shark saying, "Where the cream filling!" Well that was years ago and thye had lots of cream filling in them,then later they changed the recipe and they weren't as moist,they didn't taste the same and very,very little cream filling. It's like every thing else they downsize the quality and raise the price and the taste is terrible. So if you go broke and don't make them anymore,IT'S YOUR own Darn fault.  Don't blame the workers.  Also these works make  good money on the job,more then they deserve.  People are greedy and don't appreciate that they have a job and be happy they have one.  Instead they want more money,more benefits,etc and are just down right GREEDY !!!!  So let Hostess go broke and 18.000 lose their jobs.  You both deserve losing everything for being GREEDY.    KARMA biting you all in the A**.  I stop buying your hostess ever since I wrote you a letter complaining about the quality and raising the prices. SO GREED will make you go broke. So goodbye Hostess you won't be missed.
Nov 16, 2012 11:24AM
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Now we will all know how Woody felt in Zombieland. Thanks Union!
Nov 16, 2012 11:23AM
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Well you voted for a president that didnt want jobs. Cant have your cake and eat it too.

Nov 16, 2012 11:23AM
Nov 16, 2012 11:23AM
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I will miss those Twinkies, guess I need to make a run on the store, a great old fashion snack.
Nov 16, 2012 11:23AM
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Yes, companies are laying off all over to get under the 50 employee limit for Obamacare costs.  The unemp this week rose from 365,000 to 459,000!!!

 

They tried to say it was storm (Sandy) related, EXCEPT, the total increase in NJ, NY, PA, MA was only +5500, so where did the other 84,000 come from, huh?  

 

Companies can no longer be squeezed, something has to give!!!!

Nov 16, 2012 11:23AM
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It always amazes me that when a company like this falls none of you people on here say a word about the way the company was run or that their suppliers were also pricing them out of business or the demand for their product is drying up.  If its a union shop it must be the unions fault.   I'd venture that most of you have never belonged to a union and so are just regugitating right wing talking points that have been part of the republican agenda since they became the party of big business and they discovered that they contribute to the democratic party.    A union is just that. A group of workers that band together to be able to at least have some say in their own lives and working conditions. They are people that stand up for themselves and their fellow workers.  They are not the villans in this scenario. They are people that have decided to stand up for themselves. I'm not here to defend unions but rather to ask a fairly simple question.   How much are you willing to give back to your boss to keep your job and what will you do when they want more than you can afford to give back?    Should the entire country just jump right to it and everyone earn no more than minimum wage and no benefits which would keep us all below the poverty level and on federal assistance or better yet just abolish the minimum wage and all just be glad if at the end of the day the company throws us a few coins for our 10 - 12 hours of work? 
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