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.
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.
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!!
I wonder the next time i eat a twenkie will it say made in china
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.
Well you voted for a president that didnt want jobs. Cant have your cake and eat it too.
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!!!!
Copyright © 2014 Microsoft. All rights reserved.
'We're not exactly in a uniformly strong market,' says the notably pessimistic newsletter publisher.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.