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 11:02AM
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i love this story i hope they close and every damn one of those greedy union bastards lose there jobs thats what they deserve. and of course the union man would blame it on the company he sure wouldnt blame it on greedy union people thats paying his salary. hey union dumb bells remember safe way grocery stores that was in the metro plex? oh thats right there not there any more the unions put them out and put there self out of a job as well boy you union people are really stupid and your doing it again. wished i still lived in the metro plex cause i would be able to buy a lot of stuff cheap soon when you idiots start selling off all your stuff cause your broke and out of work
Nov 16, 2012 11:02AM
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They should have been based in Arizona where it is a right to work state. Maybe I would have a job right now.
Nov 16, 2012 11:02AM
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I respect the concept of a union. Just never see it in proper action. Seems to me the only winners are ever the union. They collect the dues and make a better lives for themselves. Thugs.

Nov 16, 2012 11:02AM
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Can i ask a stupid question.? Does China have unions and the same regulations that american's do.??How can we compete with a country that pays their workers 10 cents and we pay ours 5 dollars for the same exact product. the white house is going to find out that it's only going to go down hill at a fast rate of speed.. That's an hourly pay scale.. i don't know if its an exact figure?? But i think you get the idea..         

Nov 16, 2012 11:02AM
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Well now.... time to stock up on twinkies.
Nov 16, 2012 11:02AM
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One more example of union excess at the cost of the employees they are being paid to represent. Obama did not save GM he saved the union for a will. At some point in the near future they will need to get concessions from the union or 42 billion they still owe the tax payer. Good Luck
Nov 16, 2012 11:02AM
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I can't agree that unions serve NO purpose, even today. However, they do grossly overstep and abuse the power they have over a company. This is a prime example of union heavy-handedness doing far more harm than good; in fact, doing NO good at all.

It does't even benefit the union itself to lose the dues of over 18,000 members! Will the union do anything, ANYTHING at all to help these members continue to support their families, or will they simply pawn them off on the gevernment and run off and try to organize some other company's workers?

Nov 16, 2012 11:02AM
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First, any lost jobs are a terrible thing. Now the good news. Americans might actually loose a few pounds. Fat B#%&ards...
Nov 16, 2012 11:02AM
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good! maybe millions can prevent diabetes 
Nov 16, 2012 11:02AM
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How often do you hear about a company going out of business because of a strike?  I'll just throw that out there to see if all this union bashing is warranted.
Nov 16, 2012 11:01AM
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So The UNION MENTALITY at Work Again :-) You Stupid Idots!

Now Hostess Should Publish a List with Their Names, So Everyone Can See Them. And Who Knows Maybe Other Companys Just Won't Hire Them.

So The American Unions Strike Again! Stike Themselves Out of Work and a Company I Grewup with Is Gone :-(

Nov 16, 2012 11:01AM
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Does this mean that the Hostess snacks will ALL be discontinued!? My kids are SO gunna be missing out. Great unions we got there. >:-/
Nov 16, 2012 11:01AM
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Once again, a union is the last straw in breaking a companies back.  How does this end benefit anyone except the union bosses who will continue to collect their fat check and benefits.  Union membership should realize their leadership has only their self interest in mind, not the memberships.  

Nov 16, 2012 11:01AM
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Hostess has been around for at least 60 years. How does management screw that up.?
Nov 16, 2012 11:01AM
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Unions & their greed shut down another manufacturing facility, the 82 year od Hostess corporation. This country is going down the drain & can't afford to lose any more jobs, jobs which won't be replaced. Unions should have been abolished in the early 1900s when they last served any purpose. Of course union workers would strongly disagree being that they are largely underworked & overpaid. Try to get rid of a lazy union worker. Can't be done. Of course Bailout Nation, the good ole US helped the undeserving car makers. Why don't they print up some more Monopoly money & help Hostess.
Nov 16, 2012 11:01AM
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I don't understand how Hostess could go out of business with all that bread.
Nov 16, 2012 11:01AM
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At least now they'll all qualify for free cell phones
Nov 16, 2012 11:01AM
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Negotiated yourselves right out of a job. Way to go. Greed at it's finest. 
Nov 16, 2012 11:01AM
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So funny how everyone is suddenly anti-union.  If not for unions you would be working in unsafe conditions, for 100 hours a week with very little pay.  Unions made it possible for you all to be able to have the life and the wages you now make.  You all would get rid of unions thinking your company would continue to do the things that they offer you now, without the union or threat of it, you would be back to doing back breaking work, and making nothing in return.  Sounds like the union and the company had reached and agreement, that part was over- the fault here lies with those employees who did not return to work after they had struck a deal.  Point the blame where it goes and get off your GOP high horse and turn off Fox "News" and learn facts. 
Nov 16, 2012 11:01AM
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This is exactly what obama wants - more unemployed & in need of gov't assistance.  Thanks obama & the Einstein's running the unions
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