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 10:28AM
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Hmm.....Must be they were'nt too big to fail......no bail out.
Nov 16, 2012 10:28AM
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How much were the top execs willing to take in a pay cut? But, lets blame the unions.
Nov 16, 2012 10:28AM
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How's that UNION working out for you now.  NO JOB!!! HOW STUPID. Sometimes we have to make concessions for the short term to insure a future. 

 

Nov 16, 2012 10:27AM
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Man this **** blows.. I love hostess and would hate to see it go. I hope things turn around so it doesn't end... =/
Nov 16, 2012 10:27AM
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do you think "union mentality" start with Obama?? please... this has been a problem for years and years and it's nothing new.  I blame the unions for any large corporation shut down for just pure greediness.  Do you think the union's run for free??  the workers pay and pay and pay dues, when they could be paying for benefits directly to the company they work for and that's paying their salary.
Nov 16, 2012 10:27AM
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First Kodak, now Hostess? There goes my childhood.   :(
Nov 16, 2012 10:27AM
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If people WANTED the product, they would still be in business...period....
Nov 16, 2012 10:27AM
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Damn unions and strikes. Hope your happy losers!
Nov 16, 2012 10:27AM
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In this case, I think the current administration did build it.........
Nov 16, 2012 10:27AM
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How  many consessions did management take themselves to save their company. I bet NONE
Nov 16, 2012 10:26AM
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Hopefully this will impact some of those obese people who are addicted to them!

Nov 16, 2012 10:26AM
Nov 16, 2012 10:26AM
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This is what Obama backed unions are going to do

 

Obama care is going to cause more companies to fold because of rising health cost.

 

 

The Goverment can not keep giving away things they dont have and it will soon be the tax dollars from 18500 more american people...... and the taxes from the company that is closing

Nov 16, 2012 10:26AM
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Shame my dad worked for them for 40 years his previous employer also a bakery was put out of business by union demands.

 

Dad said the union really did lots of good in the early 50's but constant demands finally got out of hand.

 

We really need a Right to Work Constitutional Amendment.

Nov 16, 2012 10:26AM
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Good old union workers. They sure do stick together. Right up to the time they put themselves out of work and a company out of business.
Nov 16, 2012 10:26AM
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When will people get it that unions don't serve a good purpose any longer in this country. Now we have many thousands more people who pushed themselves out of a job and closed another company down.
Nov 16, 2012 10:26AM
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Yep.  Unions work wonders again. 

Bad economy and they strike.  Serves them right; every one of them deserve to lose their jobs along with their parasitic union "leaders".

This must be more of that Obama magic and charisma in helping the economy get back on track.

Get ready for more...

Nov 16, 2012 10:26AM
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