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 3:00PM
avatar
why is it that unions can take cuts to keep doors open, and company's can't hire the right management so this kind of thing doesn't happen again, but again you morons blame the unions instead of corporate greed for their closings, next time try working together to solve problems without power tripping, unions are good to work with you realistically, no B.S. 
Nov 16, 2012 3:00PM
avatar
wooooooohoooooo, twinkies for everyone.
Nov 16, 2012 3:00PM
avatar

    Pres,  Hunt of the union says Hostess and Wall Street are to blame for wanting to sell off the company.  Hostess is a PRIAVTE company.  It dosn't take orders from Wall Street.  It is unfortunate that people have this entitelment mentiity.  It starts with the goverment and with liberal thinking in the world of academia.  ( schools ) sorry about the spelling!

Nov 16, 2012 2:58PM
avatar

Wow, it's the unions' fault Hostess went bankrupt, not the upper management that was probably making well over a $1M a year, lol... Yeah, those pesky workers wanting benefits and $10 an hour took down a company, not a guy like Driscoll, who Hostess wanted to pay $1.5M a year to "restructure" Hostess.

 

 

Nov 16, 2012 2:57PM
avatar

The article said nothing of the higher management.  Do you think they took pay cuts?  How many are gonna walk away with millions of money cause of the nice contract they signed?  Why couldn't the top management take the cuts instead of the workers which they did...read the last sentence of article. 

 

It is alot easier and faster to blame unions...but the company sounds like was having a hard time awhile ago. 

 

The people who still are complaining that Obama won the election have to realize that democracy worked.  Obama won both electoral and popular vote so get with democracy or get the **** out of the country and go to Cuba or another dictatorship.

Nov 16, 2012 2:56PM
avatar

Linda Bass...I agree with your thinking, SOMEWHAT...??

 

But then an immigrant or even maybe an illegal, would take or do YOUR job for less.....AND THEN,

 

You would be on here bitching about that...DO YOU see where all this is going,YET....??

Nov 16, 2012 2:55PM
avatar
it is hard to believe a multi million dollar company who threatens to close to end a stike, does not have enough money in resreves to survive a 10 day strike.  In the artical it mentioned the other union agreed to a cut but there wages, but hostes had incressed its payment amount to venders.  This mostly sounds like a union killing deal.. I will bet a buyer is lined up to take over and the top managment staff will be retained with the new ownership.  But they will kill the unions off and lowers all the workers wages under the new ownership.  I hope the court see the sham I am guessing this is.
Nov 16, 2012 2:55PM
avatar

It was not the union membership but rather the Union Management --they are the force behind persuading union members to vote down contracts and who put into office socialistic politicians that are only looking out for themselves not the general population.

 

Nancy, Harry and Obama want more people on entitlement programs this guarantees' there bounds with lobbyist and a positive cash flow.

 

Remember poor people do not hire people --- we need people with vision, creativity and money to create jobs.  

 

For all you takers -- it is as good as its going to get for you --live with it. 

 

Nov 16, 2012 2:54PM
avatar
Well it's probably for the best because everything that Hostess makes is absolutely horrible for you and they are the biggest culprits behind the childhood obesity rates going on because of the high sugared extremely chemical laden food that they make so those idiot Union people in their extreme greed is actually doing the world a very big favor. 
Nov 16, 2012 2:54PM
avatar
It's OK. Obama will pay their rent now...

The anus screwing continues.

Nov 16, 2012 2:54PM
avatar
Go back to the january 11 2012 Hostess bankruptcy. The CEO's owed over $ 1 billion in debt including$ 955 million to the confectioners and bakers union pension fund. It is the CEO's who took Hostess to the tank. A govt probe should be made , Enough is enough with out of control CEO greed.If the Hostess CEO's could ship the jobs to China(they can't because it is perishible food) they would. As we saw in the 2008 meltdown The CEO's who plundered and piliaged their companies walked away with their millions. We must realize that we are dealing with a new type of american CEO. They are people who have graduated from the finest colleges and universities and conduct themselves as though they just fell out of a tree and have no idea what civilization is all about and their role in preserving it. Their greed must be regulated .
Nov 16, 2012 2:54PM
avatar
I BET THE C.E.O's ARE MAKING ABOUT 100 TIMES WHAT THE WORKERS ARE MAKING  ZzZZ MAN
Nov 16, 2012 2:52PM
avatar
its sad that the unions have done this .now they will lose their jobs. I used to be in a union job with the teamsters and i can see they are the only ones to agree with a pay cut . sometimes the members have to save their jobs and tell their leadership of the union they are wrong.this will not only hurt the workers for Hostess but all the companies that sell their products and supply them with ingredients, man this is gonna hurt alot of people thanks Union bosses talking your members into a strike . unions have to be able to adjust with the times and not always be so greedy
Nov 16, 2012 2:52PM
avatar

Hospitals are suppose to be non-profit...heh,heh..

 

Union workers normally make a product, bought by Consumers.

And 95% of those Companies do quite well...

Plus union members or anyone with "decent wages" spends a lot of money..

Nov 16, 2012 2:51PM
avatar

Most of the comments have trashed the union but we forget that many of the rights we have as workers are due to their efforts. We are all to young to remember factory towns and the slave like working conditions many of our grandparents were subjected too. However, their usefulness has waned and they cause more destruction to the economy than assistance. We need to thank them for their contribution to the improvement of our working lives and offer them an honorable retirement.

Nov 16, 2012 2:51PM
avatar
The Walmart Union employees are calling for a strike on Black Friday.....maybe soon, very soon there will be a lot of Walmart jobs open...I hope, I hope.....you see, I do not mind working for a reasonable hourly wage....heck, I don't mind working....wish they would ALL get laid off so some people that want to work can work.
Nov 16, 2012 2:51PM
avatar
This is what happens when you have liberal union democrats that stike, they kill companies with their wage wars. I am against illegal immigration but how do survive with high demand American workers demanding more money when the company is going under.It is a sad story, an American icon gone because of greedy workers.
Nov 16, 2012 2:51PM
avatar
Regardless, whose fault it is because there was no compromise - you all lose.  Just the same way the government wants our country to go bankrupt.  In this day no one wants to compromise no matter how big or small the issue is.   We expect other countries to get along, when we as Americans are so far apart on anything that will bring our country together.  When will everyone wake up?
Nov 16, 2012 2:49PM
avatar

People really need to read the last sentence..."Hostess had already reached agreement on pay and benefit cuts with the International Brotherhood of Teamsters, its largest union".  If you make $20/hr and you agee to cuts to help your employer....would you then be willing to go lower to save the company?  Says in article they went bankrupt before the strike so how are the unions responsible?

 

People have to realize that union wages help raise all non-union wages.  If a union warehouse making $15/hr and a non-union warehouse next door has to offer higher wages just to keep competitve.

 

I am tired of companies and cities saying that unions are breaking their budget....when they all spend more then they bring in.  Me and you would all be thrown in jail if we did our checkbooks the way they do.

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

125
125 rated 1
264
264 rated 2
485
485 rated 3
679
679 rated 4
640
640 rated 5
617
617 rated 6
632
632 rated 7
493
493 rated 8
276
276 rated 9
153
153 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
TAT&T Inc9
VZVERIZON COMMUNICATIONS8
CTLCENTURYLINK Inc8
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.