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 11:01PM
Nov 16, 2012 10:56PM
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Union Logic = Religious Extremist Terrorist Logic...both want to bring an end to America...both won't stop until they do...The Twinkie is now a symbolic death...
Nov 16, 2012 10:55PM
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How do you mismanage a company where the product sells itself...greed.  That's how.
Nov 16, 2012 10:52PM
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I'm sure the corporate officers still received huge bonus's this year. This is another example of corporate fatcats getting fatter while they try to shaft the workforce that made them the millions. the cost of living continues to rise yet  they expect their workforce to take a paycut. And you idiots want to blame the unions?
Nov 16, 2012 10:36PM
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Union Labor...The American terrorists...bottom feeding scum...RIP Twinkie
Nov 16, 2012 10:28PM
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Another top-heavy poorly run corporation going belly-up. This is a good thing, the days of fatcat executive-run corporations is over. Expect to see a more dynamic share-holder driven corporate structure develop as those risking thier money demand realistic levels of profit, good management and a steady reliable income and not over-paid exec yes-people and continous growth as the only measure of a companies success. The paradigm is shifting. Don't blame the union, these people only want a fair wage. Since this is a Texas corp. they may just be prepping for thier states proposed seccession. Another better -run U.S. loyal dynamic company will fill the void and a better snack cakes will result.

Nov 16, 2012 10:25PM
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JUST THINK ABOUT THIS.

IF HOSTESS WANTED TO STAY IN BUSINESS WHY DIDN'T THEY HIRE THE UNEMPLOYED WORKERS AT A REDUCED RATE WITH NO BENEFITS? THEY DIDN'T WANT TO STAY IN BUSINESS. THEY GAVE UP PRETTY FAST FOR NO MORE WORKERS ON STRIKE.

  THIS IS WHAT THEY WANTED. THEY KNEW WITH THE SHAPE OF THE COMPANY IT WAS WORTH MORE MONEY TO THEM TO SELL IT OFF BY THE PIECE THAN TO SELL IT TO SOMEBODY AS A WHOLE. YOU HAVE THE BAKERIES, THE NAMING WRITES,(WHAT DO YOU THINK SOMEBODY WILL.PAY FOR THE NAME TWINKIE,DING DONG,SUZIE Q) MILLIONS

  REALLY THESE GUYS ARE PRETTY SMART. THEY DON'T HAVE TO PAY ANY SEVERANCE PACKAGE TO ANYONE. YOU JUST BLAME YOUR UNION WORKERS FOR IT.

Nov 16, 2012 10:11PM
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I'm a member of a union, and my life is immeasurably better because of it.  I also have a degree in media criticism, but certainly didn't need that to be wary of this article.  So all of you who have made anti-union comments have done your research, I assume, before believing everything big business tells you?  Don't you think it is in large companies' best interest to have all of you be anti-union?  I think I'll do some research before eagerly eating whatever fluff big business tries to feed me.
Nov 16, 2012 10:09PM
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Get all your facts on any Union at Union Facts.com-look at the pay raises over the last 5 years for the Union Bums
Nov 16, 2012 10:07PM
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Management is closing down in order to kill the union and not to pay the factory workers billions in pensions bank accounts.  The pension money will be robbed by the management for their golden parachutes for running the company into the ground.
Nov 16, 2012 10:03PM
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BAKERS UNION - Overwhelming Stupidity.................

 

Now The Illegal Alliens will take your jobs and leave with Zippo !

Nov 16, 2012 10:01PM
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This is so sad for these employees and the company. I am anti-union; but there has to be a middle ground. 18,500 people out of work is not an option!

Nov 16, 2012 9:59PM
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DUMB@SSES!!! Yeah, give up your paying job for welfare... now that's real smart! 

UNIONS = BULLIES!!! We had union issues here locally (Longview, WA ) at our Port, and they lost A LOT of support from local citizens purely based on their actions alone -- they acted like spoiled brats! And then when they blatantly broke the law during their protests (which included bringing in "union members" from other states to help fight their "cause"), they showed complete disregard and disrespect for our local law enforcement when they tried to arrest them. Then tried to say the police were using excessive force when in-fact they were resisting arrest and tried to get the local sheriff fired through the Superior Court system! UNIONS = BULLIES!!!
Why  they think they are above the law, I don't know, but that's when they (and unions in generally) lost a lot of support from the people in the community. UNIONS = BULLIES!!! 

And mind you that the longshoremen (union workers) around here GET PAID for FOUR HOURS ($20.00+ /hour) for JUST SHOWING UP -- EVEN IF THEY DON'T WORK! ! And if they DO work, they WORK FOUR HOURS and GET PAID for EIGHT HOURS! 

Unions are killing America. No wonder we are losing so many jobs overseas. 
Nov 16, 2012 9:58PM
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You union bashing butt heads talk like you know all about this situation.. You  must know HOW DEEP and far reaching the concessions that Hostess was asking????? Maybe if your employers were seeking to cut your pay to a point it would make you unable to support your families on the new pay. you also would rather hold out and see if the company executives would give you a living wage or find new jobs themselves. Of course the execs most likely will get big bonuses for bankrupting the company for the third time in 8 years, but that's the NEW US version of capitalism.  The Teamsters, a bigger  Hostess union, had already settled with the company. How big were the cuts they took compared to what the bakers were being asked to take???????  Since you all seem to know so much about this dispute I figure you all would have that information at the tips of your fingers. I live i a town where there are losts of ilegal latinos who would jump at taking those bakers jobs for most likely half the wages the Hostess would likely offer. Those cheap laborers live 5 families to a house or mobile home, don't pay taxes, use the local hospital's ER as their health care system and  aren't burdened with drivers license fees, auto insurance, etc.  You all seem to want this standard of living for America's working class, WELL I DON't T!!!!!!!!!  The one thing I am sure all you anti union clowns have in common is thinking "everybody is OVERPAID, EXCEPT YOU."
Nov 16, 2012 9:50PM
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OBAMANATION Unraveling Right Before Your Eyes !

 

Keep It Up - SRIKE - STRIKE - STRIKE in hards times BARRACK and everyone will be on Welfare !

Nov 16, 2012 9:49PM
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PAY ATTENTION FOLKS!!!!!!!!!!  THIS COMPANY/BRAND IS AN AMERICAN STAPLE.  THEY WILL SHUT DOWN AND RE-OPEN AS A NON-UNION COMPANY..............  THIS HAS HAPPENED NUMEROUS TIMES BEFORE.    THE RICH CONTINUE TO SCREW THE POOR AND WORKING CLASS!!!!!!!!!!!!  

Nov 16, 2012 9:44PM
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GREED - Now you have No Jobs - Smart Guys  -   I'd Never Hire You  !  EVER  LOSERS !

 

Now we know who the real Ding Dongs Are !

 

 

Bakers Union Messed it up for everyone - SUE The Bakers Union and Fire Those Ho Hos

Nov 16, 2012 9:42PM
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It's sad to Hostess going out of business. Sad too seeing all this bickering but I can understand it. I belong to a union now and can tell you that some of the members can be pig headed but most are reasonable. So I don't wish any good worker losing their job because of some impossible to please co workers. Also worked for some pretty lousy management too, causing our non union business to go under. I think blame could be placed on both sides of the isle. Greedy union, greedy incompetent management and every one pointing fingers at one another when every one is to blame.

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