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 11:09AM
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I'd like to see Donald Trump eat a Twinkie out of Michelle Obama's snatch to raise money for saving Hostess.
Nov 16, 2012 11:09AM
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Its funny but the majority of people voted for this by voting in the union's prime proponent, Obama. Thank you america for emboldening the unions by voting in a socialist who thinks we should all be part of a union so all our dues can pay to keep electing socialists from now on. You, the majority, can welcome one of many company failures to come at the hands of Obama's emboldened crony unions.
Nov 16, 2012 11:09AM
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You folks are a bunch of morons. Only about 14 % of this country's labor is organized. And their the reason things are screwed up. I don't think so. I see, you to work for someone who pay's you what ever they'd like. And your suppose to leave every week with a smile on your face, while everyone at the top gets the cream. And you wonder were the middle class has gone. What a bunch of morons.
Nov 16, 2012 11:09AM
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Yeap, 4 more years

This is why you locate your production facilities in 'Texas' or the 'South' or other "Open Shop" States and let the morons in the Union States destroy their own future.

Nov 16, 2012 11:09AM
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What a bunch of narrow minded jerks. Always pointing the finger at the unions. Why don't you open your eyes and take a look at pay checks for the upper management. They make many times more than the working class and they never take a pay cut. And I'll bet you that the CEO made a hell of a lot more than ANY union leader.
Nov 16, 2012 11:09AM
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Executive salary couldn't be at fault. Greed at the top is often overlooked, but you can only charge so much for a micro cupcakes, and if they get much smaller they won't be worth buying anyway.  We do have to put together a good retirement package for the Management staff. Have you looked at the candy bars lately ? They look like the samples they used to give out in the 60 s. There will be no unemployment checks for the union workers, so it's best that they go back to work, and work on decreasing the number of managmrnt staff.....
Nov 16, 2012 11:09AM
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little debbie  still going strong  making a better  cake at a better price  and  lot  better  management.  GOD BLESS  MCKEE FAMLIY

 

Nov 16, 2012 11:09AM
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Bring on "Little Debbie"..........
Nov 16, 2012 11:08AM
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To all of the myopic people blaming the unions - do you realize that Twinkies filed for bankruptcy BERFORE the strike even occured? Did ya???

 

 

Unions were simply pointing out a problem that was there all along - the INVESTORS wanted to ruin the company so they could sell it's assets. The workers are want kept the company going and they had every right to stand up for themselves.

 

A well managed company doesn't go under in just a week. 

Nov 16, 2012 11:08AM
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I am going to miss the Twinkie (even though they are bad for you) and the Merita bread.
Nov 16, 2012 11:08AM
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Oh sure, it is all the union workers' fault because Hostess is pure innocent and without a single fault.
Nov 16, 2012 11:08AM
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************* Hot off the Press from Newswire ************

 

Obama wants to offer all unions and members  free GM cars as part of proposed bailout for Hostess

Nov 16, 2012 11:08AM
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dont worry hostess, stupid fn obama will bail you out


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As a union shop  steward I had always tried to tell my bargaining unit that while they alway screamed we want more that they needed to remember that at what point does you demands become to cost prohibiting. Yes everybody wants more money but it's more important to have a stable job, but they just wouldn't listen to reason. Dept. was disbanded 5 years ago since then they've all been struggling. All I can say is thanks my union brothers appreciate your greed costing me my job.

Nov 16, 2012 11:08AM
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Organized labor was a necessity in the beginning, but as it got more powerful - it got greedy - the union dues as a percentage of income gained by workers in many fields have been better for the Union than the workers.

If free health care is an issue the owner providing it - my wife worked for an insurance company for 30 yrs, paid her employer to provide insurance - was cheaper than the street cost - people are losing common sense and greed has taken over the entire thought process not just for business owners, but also the middle class if we continue we will be deeply entwined into a socialistic country, glad I most likely won't be alive in 20 yrs to see what happened to once a powerful and respected Country.

I feel for the future generations unless they wake up quickly 

Nov 16, 2012 11:08AM
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Yep.
The Jungle is a compelling story, and the reason unions were needed and formed.
That was a long time ago.
Now, we have the same sad story of greed trying to protect lazy, whining union folk.

Nov 16, 2012 11:08AM
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Geeeee    Happy thanks giving and a Merry Christmas and a wonderful happy new year to 18500 newly unemployed      can't ya just feel all the happiness  and time marches on and what have we learned???????
Nov 16, 2012 11:08AM
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We need to find Hoffa and bury a twinkie next to him.  Sad.
Nov 16, 2012 11:08AM
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I hope everyone of you union haters find out one day how much the unions help you keep your pay, vacations and other rights as a worker.
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