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.
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.
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.
BAKERS UNION - Overwhelming Stupidity.................
Now The Illegal Alliens will take your jobs and leave with Zippo !
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!
OBAMANATION Unraveling Right Before Your Eyes !
Keep It Up - SRIKE - STRIKE - STRIKE in hards times BARRACK and everyone will be on Welfare !
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