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 1:39PM
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Well pay your exc more than your workers. than tell your workers you can't pay them more, and they Have to work harder for less. than cut corners than ship the job overseas and expect to get a ecomonic boon. Haha,haha  you idoits ... I hope God makes you pay dearly for  it and you exc Lose it all. and find yourself as a workers with boss that  just like you where. See How you like that... Enough said.
Nov 16, 2012 1:39PM
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Read the book "Who Stole the American Dream?" by Hedrick Smith.  This is a typical example of the greedy american management and investors efforts to steal the money out of the workers pockets and send them packing penniless.  Under bankruptcy, the company will not have to honor any pensions guarentees and steal the money and sell off the assets to cover and pay all the investors the money they really don't deserve or need. 

 

The last comment shows how little the people don't about their own country and how businesses have influenced law makers to push through bills that favor the business and destroy the middle class in the name of greed.  The first thing that needs to happen is to change the bankruptcy laws back to pre-1978, and change the law to make stockholders vote a binding vote on corporations management.  Those would go a long way to straightening out this mess the business have gotten american in.

Nov 16, 2012 1:39PM
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Did  any big shots take a pay cut or retirement ? That's why unions were made to prtect the blue collar worker.Wake up America!
Nov 16, 2012 1:39PM
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A union is simply the conscience of the working class, we ask the question why? everything in America has a union stamp on it in some way or another, from the houses we live in to the clothes we wear, to the cars we drive, almost everything in American has a union stamp on that product, yet non union members forget or aren't aware of that fact.
Nov 16, 2012 1:39PM
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Did anyone ever say the name "Mafia". That's who started the Union Workers 80 years ago. But then times were different then. People were treated unfairly by the corporations. Working conditions were horrible. Working long hours at minimal pay with no overtime pay. That's why we get paid overtime if you work more than 8 hours a day, or 40 hours per week. Many companies stay away from the Mafia. I mean Unions. Look at the electronics industry. Many give the workers good pay, and good benefits just to stay away from the Unions. What more can you ask for? Our economy is very bad now, and will be for a very many years to come. So why do you push the companies for more? Did this Union see how many people are unemployed nation wide??? WHAT WERE THEY THINKING?????
Nov 16, 2012 1:39PM
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The few hurt the many(their so called brethren)!
Nov 16, 2012 1:39PM
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if u want  buy artificial crap thats no good for you,  at least buy  crap that tastes good,  like entenmanns, bye hostess,  i wont miss you
Nov 16, 2012 1:38PM
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This is a planned attack on the obesity problem in America!!

Nov 16, 2012 1:38PM
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In today's economic climate, you can trust the unions to eventually cost you your job.  Unless, of course, your President decides to let taxpayers pay for a bailout.

Nov 16, 2012 1:38PM
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It seems that people like to blame unions for everything possible, but forget that their parents where probably union workers , unions and their members fought long and hard for the benefits that they earned  the 40 hour work week weekends off fair pay for their labor overtime pay medical dental maternity leave the list goes on but the younger work force thinks that these things were always theirs for the asking ! employers do not like unions because it gives employees a level playing field with management but this is only my opinion maybe the younger work force of today would like their jobs these hard earned benefits without the sacrifices that their parents made for them no more 40 hr work week, no benefits no maternity leave  nothing  the boss doesn't like the way you look your fired.
Nov 16, 2012 1:38PM
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Some of you may say well they shouldn't have taken the job.. I understand, however most American’s work more than two jobs just to make it in this economy which in turns take away from the family structure: translation: more moms and dads out of the house working long thankless hours to provide for their children. Children who are raised by their friends on the streets, many American would like to be able to see their child off to school or place them in a nice after school program, but these things cost money and American’s in today's economy just can't afford that when health care is rising the cost of living is rising and gas prices are still at a higher rate.

So what do people do when they see their bosses getting pay raises, that ask the question why?

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this is one of many the unions will bankrupt with there strikes. they almost ruin there chances of Boeings staying in Seattle at all because of a Greedy Union striking for months. So Boeing and other co. will either go to a different state or out of the country.I dont understand why the union members even strike when they said that they will close up and go out of business. even state and federal workers are taking less money and paying more for their insurance. Where are they going to work now in todays job market.  
Nov 16, 2012 1:38PM
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I was one of the employees who chose to go back to work, but, there were not enough of us to keep the company going! now, i'm out of a job, thanks to a few bullheaded employees who refused to budge!
Nov 16, 2012 1:37PM
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My neighbor's delivery driver husband already gave back a wage cut of $100.00 a week, and management wanted more cuts.  How many of you union haters would give up more than $400.00 a month out of your checks.  Your're greedy management types won't be happy untill they can sell you a "MADE OVER THERE" product!  Wise up you cubicle kiss asses!
Nov 16, 2012 1:37PM
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What are all the apocalypse people gonna eat when the Zombies attack at the end of the world? Seriously, unions are no longer for the workers ,but a mafia controlled, selfish organization.
Nov 16, 2012 1:37PM
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wow all you people are speaking like true retards. unions are the only reason that people get to enjoy certain luxuries like raises vacation time sick time and weekends so the next time you think about saying some thing bad about the unions maybe you should think about the fact that all of the executives of these bigg companies are multi billionares and if they really wanted to keep the company afloat they could reach into their extremely deep cash lined pockets and give up some of their money.
Nov 16, 2012 1:37PM
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i can believe how gullible you people are, do you really believe that a few union salary's caused this crisis. How about mismanagement and large salaries for the executive branch. 1/8 of the entire
Hostess budget is paid to labor. those 18,000 + workers who were on strike refused to take a pay cut at their expense to pay off 1 billion in debt that Hostess created. So before you idiots make stupid remarks at least know what the hell your talking about. If you hate unions so much, move to a third world country were you can work 12 to 14 hours a day for about 1.00 an hour. Don't forget to take your kids i'm sure you can put them to work too.
Nov 16, 2012 1:37PM
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Union Officers do not care about the Rank and File workers.  Just their personal income and benefits.  Strikers are now costing themselves to lose their livelyhood.  All you other Union workers out there, pay attention.  Unions are doomed unless the Rank and File pull their Union Bosses off of their thrones.
Nov 16, 2012 1:37PM
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Hope the union workers lose their homes and cars and whatever else.... Hope they starve on food stamps...  Freaken morons.....  Hope they enjoy the unemployment line.......Thank you!!!!!!!!  Another American Icon down the drain..  When is America going to wake up.  So many people out of work I know you could have found someone to fill their positions....
Nov 16, 2012 1:36PM
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And once again Obama gets elected and is heavily backed by unions. Don't know why it's such a hard concept for democrats to grasp. If you make it hard for a business to operate then it will close it's doors. Get ready to see more of these headlines. The next 4 years are going to be absolutely terrible!
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