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 11:10AM
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I am so sorry to hear this news.  Hostess cupcakes and Suzy Q's were my favorites. 
Nov 16, 2012 11:10AM
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Hey, unions are strangling the post office too.  Shocker!
Nov 16, 2012 11:10AM
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The Hostess brand is the companies most valuable asset. The company will be dissolved. But the Hostess name, and the old bakeries will be bought at a very low price. End game, New company will not have any union employees. I expect a major competitor will buy it. Old employees will get there jobs back, and paid considerably less than they were negotiating for.
Nov 16, 2012 11:10AM
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Unions = Obama = the downfall of America
Nov 16, 2012 11:10AM
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Unions can not be blamed for mismanagement and greedy execs who get big bonuses even thou the company is going under or doing poorly. Give me a f'n break. Union members who are only getting 11-16 an hour does NOT make up the sometimes millions in cash that ONE person gets for a bonus. How many of you actually know the complete history here other than just posting "It's all the unions fault" or that it's Obama's fault based off of this article? I'm betting very few. Know your facts before posting s**t up on here. 
Nov 16, 2012 11:10AM
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Obama wont bail out Hostess, it would not meet with Michelle's eat healthy agenda.
Nov 16, 2012 11:10AM
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The company, which filed for bankruptcy in January for the second time since 2004

Since 2004. Who was the president in 2004? PLEASE.

Nov 16, 2012 11:10AM
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Welcome to Obama's America. One down millions to go.
Nov 16, 2012 11:10AM
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Looks like none of the people who commented read the article.  It said that the union and the company had made an agreement, it was the creditors who refused to negotiate their payback terms.

 

Nov 16, 2012 11:09AM
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Breaking News:
Dow down 300 today due to tinkie shortage. LOL
Nov 16, 2012 11:09AM
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After minimal research, the other side of the story talks about a 2002 CEO raise of 300%, numerous top CEO's getting 35-85% raises while the CEO position changed hands many times, each leaving with a golden parachute. Workers speak of gross mismanagement, year after year of pay and benefit concessions, and a company run by hedge fund managers who basically bled it dry of cash. But of course, you all want to blame some poor ol bakery employee...Would you also blame a buck private for losing a war? Look a little further than this crappy yahoo article and get a little more towards the truth....
Nov 16, 2012 11:09AM
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unions need to go away, ive been looking for work since april. f them, ill cross their picket lines


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

 

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