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 1:30PM
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There was a time when the Knights of Labor and Samuel Gompers could be construed as a necessity.  By the time that the unions got to the point of having leaders like Jimmy Hoffa and Dave Beck, they had finally committed occupational suicide.  With the death of Hostess, we see another nail being driven into the coffin of organized labor.

 

Now we have 18,000 odd people out of work along with another who knows how many thousands that were suppliers to Hostess.  No one knows how many people working for companies that supply Hostess will also lose their jobs due to the great largesse of the labor union.  Also remember tht the union administrative types will not be going hungry as a result of the death of Hostess.  This is just pathetic.

Nov 16, 2012 1:30PM
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Who cares about Twinkies what about Ho Ho's?

 

Nov 16, 2012 1:29PM
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Have a GREAT holiday season all you picket line warriors LOL HA HA HA  How's your union now AS*HOLES  
Nov 16, 2012 1:29PM
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I would work there for FREE if I could FORGET UNIONS ECT
Nov 16, 2012 1:29PM
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Welcome to Obamerica.  A society of the entitled, lazy, and ignorant. 
Nov 16, 2012 1:29PM
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Did anyone hear about the new OBAMA VALUE MEAL from Mcdonalds? You order whatever you want and the guy behind you has to pay for it. AHAHAHHAHA
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Way to go union workers. This is the mentality that put Obama in office for a second term. Good luck on the Hostess Bread line. So funny I spell checked this and it said one mistake Obama.
Nov 16, 2012 1:29PM
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At least Mitt knew how to create jobs. ODUMBO knows how create unemployment.
Nov 16, 2012 1:29PM
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Fascinating how mad everyone is at the union and won't stop for a second to even consider that Hostess was managed poorly OR recognize that we as consumers have stopped buying Hostess products, therefore their revenue has declined over the years andy yet, they've continued asking more of their employees with little to no return.  At what point is it enought? Yeah, you can say they worked themselves right out of a job. How do you know this isn't exactly what the company needed to happen so they could sell or revamp under new structure and finally get away from unions and benefits? With all this press, Twinkie buying it about to go through the roof. Most people I know are advocating for better school meals and trying to be healthier.....they aren't buying these products. Now they will. Supply & demand. Good job Hostess, this is going to work out just fine for your millionaires who messed this up to begin with. 
Nov 16, 2012 1:29PM
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In this case the unions are to balm. Dose not matter how bad the company has been mismanaged, and they know it, and told them. They decided it was more important to go on strike, and NOT work with them. The few thousand bakers union put over 18,000 others out of work for greed. Nothing more nothing less.  
Nov 16, 2012 1:28PM
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Why is this All Obama's fault.  Does he control the Unions?  I do not understand how this is Obama's fault.  It sounds like it is the fault of the Union.  
Nov 16, 2012 1:28PM
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How could such a tragedy happen, twinkies (Hostess), The UNIONS will eventually destroy all manufacturing jobs, we are competing on a World market now, unions need to be cut down to size before more familys are sent to the poverty lines, greed will destroy from within, wake up people before it's all gone.
Nov 16, 2012 1:28PM
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Noooo the Twinkies are gone some one needs to make a Twinkie factory now before i die
Nov 16, 2012 1:28PM
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The changing landscape of business yet once again proves that even the oldest in business can not survive the grips of the economy. This is not anyone's fault but the union's stronghold on its members and what did the membership gain from this experience - not any paid vacation as far as I can tell. bet of luck to you and your fellow union brothers and sisters - it is a tough job market out there and if you have not looked lately - unemployment is already at a all time high. - Many people are just ignorant and complain about government when it comes back full circle - We are a society that wants what we want now and at a lower cost...thus the end result is outsourcing and job cuts. Start looking at your own habits and perhaps you will find you are not part of the solution - but part of the problem. Thanks for killing the twinkie unions! Look forward to your next mission!
Nov 16, 2012 1:28PM
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HARD TO BELIEVE HOSTESS WITH ALL ITS FAMOUS CAKES COULD EVEN GO OUT OF BUSINESS

I WOULD HAVE SAID NO WAY IMPOSSIBLE..

Nov 16, 2012 1:28PM
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Thank god Pres Obama is sticking up for America!, Read a book, check history, if you want a country that exploits dumb people there are plenty you could move to, third and fourth world countries where people shut up and take their pitance of what is offered them.
Nov 16, 2012 1:27PM
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It is obvious to me that most of the people commenting on this blog either run a business or share in the running of one. It's all the unions fault? I THINK NOT! What about the greedy officers of the company that make huge bucks for doing virtually nothing! If businesses could do away with them and their piggish pay and benefits the world would be much better off! I cut and pasted this below and hope the person doesn't mind me plagiarizing a little. Good luck to the former employess of this company, I know I"LL never buy another of their products!!!

 

Creditors of Hostess Brands Inc. said in court papers the company may have "manipulated" its executives' salaries higher in the months leading up to its Chapter 11 filing, in what the creditors called a possible effort by Hostess to "sidestep" Bankruptcy Code compensation provisions.

The committee representing Hostess's unsecured creditors alleges that information it has gathered suggests "the possibility" that the company converted a chunk of its top executives' pay from performance-based bonuses to salary, "at least in part to sidestep" rules designed to ensure that companies in bankruptcy aren't enticing their employees to stay on board with the promise ...

Nov 16, 2012 1:27PM
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Between the unions and increasing epa regulation, they will kill all industry in this nation. By reading all these post, how in the world did that pos get reelected? SAD!!!
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