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.
3436Comments
Nov 16, 2012 12:00PM
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Im just glad to see a bunch of idiot democrate union workers out of work, Still glad you voted democratic? I call it justice. Well get your hand out and get the govt money you voted FOR.
Nov 16, 2012 12:00PM
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WOW how the world is a changing.

 

First off Unions Built the USA. Remember that... Take a good look at where things went wrong, Lets say the last 4 years have been a trying time, 8 years of one of the dumbest people in office and 1 puppet master pulling all the strings.

 

Wow gas 80 Cents a gal for Gas, before The puppet master and the dummy to over $4.00 a gal in most states.

 

The company I used to work for laid off 80 thousand people before he even gave his speech.

Its going to take Law suites and Jail time for wall street to get the msg we are DONE.,

 

This company is worth more dead then alive.  Hey maybe Romney will buy it for pennies on the dollar.

 

Get a grip and take your head out of the sand and help. Ask for tougher jail sentences for money scamming wall street execs. THEY get paid if they win or lose.

Nov 16, 2012 12:00PM
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soo sooo sad to see this happen. so many people loosing thier jobs with a weak economy. not the kinda news anybody needs. :(

 

Nov 16, 2012 12:00PM
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Another fine example of union stupidity.  They would rather close a shop than allow the company to stay open.  Talk about greed!
Nov 16, 2012 12:00PM
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Let's not forget what the sweat shops were like before the unions came along. Or, are we destined to return to those days as a reminder.
Nov 16, 2012 11:59AM
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Lets strike to get more money !!! oops! now theres no job to return to  wtf are we gonna do now???? UNION morons!!
Nov 16, 2012 11:59AM
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Obama supporting Union hacks put another company out of business! Now these poor people(literally) can blame Bush for losing their job when in fact it was their Obama loving Union leaders. It isn't Wallstreet greed it is Union greed! The Union leadership will go merrily on collecting their fat cat paychecks(many of which exceed corporate leadership levels) while the former Union members fight to feed their families!until a 9 dollar an hour job comes along! How stupid! Their Union members are too stupid to step over the line to save their families! I hate to say it, but they are getting what they deserve! Obama don't care about you! All he cared about was lying his way back into office so he and his Union Thug leaders and Chicago cronies can keep eating and living at your expense. Stupid is as Stupid does! Food riots before the 4th of July in the United States. By the way all Extended Benefit levels to Unemployment end December 29th. 5 million more people with no benefits brought to you by President Obama!  Soon their will be more people begging for food than earning a pay check!
Nov 16, 2012 11:59AM
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People really should read some actual history and not the warm fuzzy public school kind. Modern Unions got their start as the Anarchist Movement.  Motivated by the teachings of Karl Marx in the late 1800's in europe where working class people were taught if they joined forces they could take anything even if it was not theirs, business owners and wealthy were all evil and anarchists could destroy them in the name of the workers.  This was the origins of communism and the trigger for the bolshevick revolution in 1907 russia.   Immigrants brought it here and in the last part of 1800 began forming attacks on factory and mines across America.  State Police and Military troops often had to be brought in to quell violent uprisings.  Now they evolved into our present day union thugs and bullies.   Another piece of America destroyed.   Hostess and other business's build things, produce things, provide things........what has a union EVER provided or built????
Nov 16, 2012 11:59AM
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   Years ago unions were good with the idea of protecting workers with a safe working enviroment,but have taken a wrong turn.   I worked at an airport and filed a grevience over safety issue, the union rep came in and told me to stop crying and if I didnt like it quit.    When it came to contract time we the employees never got to vote.  We got a 20 cent raise 1st year 12 cents 2nd and 6 1/2 cent the 3rd year.We were told stewart voted. we never heard what we got until after it was to late.   Dues went up 8 dollars amonth.   And you wonder why 1/3 of employees quit within 2 weeks?  Unions reps live off membership. Bet they are blamming Hostess for it, they were told they need concessions to stay afloat, now they sank like the Titanic ,gone

Nov 16, 2012 11:59AM
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Again, it ain't the unions, it's a greedy "Bain" style management company trying to steal $75,000,000.00 of reserves.
Nov 16, 2012 11:59AM
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The worst part is that this Union covered only 30% of all employees. So, not only did they force the company to liquidate, they also cost all the other employees their jobs as well. The Teamsters, on the other hand, were willing to take some pay & benefit cuts to keep their jobs. Who's right? None of the above.....sad.
Nov 16, 2012 11:59AM
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So, how did that strike work for you Union?
Nov 16, 2012 11:59AM
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They are selling the brands, including Twinkies so someone will buy the recipe and make and sell them.  So it is not going away.    go to that link and read the 5th to the last paragraph.  It explains it there.
Nov 16, 2012 11:59AM
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Everyone is blaming this on the union. Did you not read the article Hostess filed to bankruptcy in 2004 and know again. If they lost $7.5 million and $9.5 million from November 9 to November 19 what happen to rest of the million or billions they made the rest of the year. Where is the money the republicans said would filter down if you give tax cuts to the rich. The company is going bankrupt not the owners. The union didn't cause them to go out of business. Bad and greedy management did. 
Nov 16, 2012 11:59AM
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Hard to believe that some people just do not get that this country is in a recession no matter what we may hear in the news. Every single item on the shelf of any store has cost more to produce, ship, and sell due to just the cost of gasoline alone. Package sizes keep shrinking-we now have a 12 or 13 ounce "pound" of coffee, a 1.5 quart instead of 2 quart ice cream, etc.. I have had one raise in the last 6 years and I am in the Healthcare field. Yes I'd like a raise to keep up with the loss of income due to constantly rising costs-but its not happening in this economy. Anyone lucky enough to have a job should be Thankful and willing to suck it up like nearly everyone else has to. Half a loaf is better than none!
Nov 16, 2012 11:59AM
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The end of an era.  Greedy unions strike again.  They had their place once, but now they have really given their members a boost, no jobs and no benefits.  I'm going to miss the Twinkies though, they were a memory of a fun childhood.
Nov 16, 2012 11:59AM
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Sorry guys but this is another Big Business trying to "scare" it's employees back to work.  How abuot the upper management and CEO/CFO and stock holders take a cut in pay and benefits. You NEVER see that happen. I worked at a large game company in WA state. They FIRED 14, yes 14, people so that a 4, yes again count them 4, management employees could get raises.  So they put 14 people out of work so they could raise salaries for people who were all ready making an average of 8 TIMES what those 14 were making. We needed a union then!! But then they closed the call center and moved it away again so they didn't have to pay wages and benefits to american workers.  I am saddened and shocked at all the stupidity I read on the board.  Yes, unions leaders are now just as greedy as the people they oppose and that IS a problem don't get me wrong but it's completely wrong to do away with them. What they need is fresh idealistic young people to come in and sweep out the old guard!! Although I am older I would be happy to step into a union and get rid of the dead weight but until the old guard is gone these unions are the best america has to offer. Sad state of affairs true.  The people who feel sorry for a big business is like feeling sorry for having a veruca removed. It doesn't make sense.  Hostess can make it if they restructure their business management. They have too many high-paid chiefs. Time to cut the fat and that needs to start at the top, the very TOP!!!! You know damn well that the elite in Hostess aren't losing any sleep right now. Their creditors will eat hostess's debt and the big guys will walk away with tons of money if they haven't started running from the ship all ready. (BTW the rats always leave first when the ship starts sinking.)
Nov 16, 2012 11:58AM
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Oh here we go again blame the union... management or managers are the real problems of this country. Most pad there pockets but want to take away from the workers who make the money for them. its so sad that people actually think that unions are bad. Romney will probably make millions on this bankruptcy like he did with Delphi.
Nov 16, 2012 11:58AM
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Solidarity my Union brothers! See you all down at the Unemployment office.  We need to stay strong and not let those clerks there push us around!

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