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 10:40AM
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Thank You! For Deep Fried Twinkies. Gone by the wayside,what is the song"And another one bites the dust."  SO, IF the Election Was Held Today????????  SO, Who are going to pay for all these people?UNIONS?????  As Betty Davis said"Fasten your seat belts boys it is going to be as bumpy ride!"
Nov 16, 2012 10:40AM
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Everything obama says about the economy is a lie‏,The truth is, America is burdened today with the twin curses of a corrupt, out-of-control government and a corrupt and unaccountable government

Nov 16, 2012 10:40AM
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There really is a greed problem in the United States --all the way around - a complete disconnect from real life --- Oh well -- I have to go pick up my welfare check  and then head over to the quickie mart, grab some cigs and get my lotto tickets and try to win 259 million dollars so I don't care.  LOL!!!
Nov 16, 2012 10:40AM
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Thank your union backed President folks!  Here's another example of how unions separate good employees from good employers.
Nov 16, 2012 10:39AM
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Unions are never part of the equation...such morons

 

"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."

Nov 16, 2012 10:39AM
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What would be a "reasonable salar(y)"? 
Nov 16, 2012 10:39AM
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Chalk one up for the unions cut your nose off to spite your face oh well you can now put the U.S. to over 50% hand outs and don't worry Obuma will give you a phone housing and a check ya know part of the payback for getting him back into office !
Nov 16, 2012 10:39AM
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Don't worry, Twinkies last a lot longer than some stupid company...  Stock up now while you still can!
Nov 16, 2012 10:39AM
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Can anyone comprehend what the unions are doing to this country
Nov 16, 2012 10:39AM
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2 bankruptcies??!! in less than 10 years..sounds like the Hostess brand is NOT what US citizens are buyng these days and  that the  company was mismanaged.  It is easy to blame the workers for failed executive decisions.  Wall street wanted them liquidated, so it is happening..my guess is the strike is way to make sure the workers are taken care of and there is not another Bain Capital decision where they get nothing.
Nov 16, 2012 10:39AM
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Let's not blame the workers what their you union leadership has done a retired union guy I know for a fact that the workers put your heart and soul into their jobs and probably a lot of more willing to take a pay cut, but is guys upstairs running the unions the said no, we want to punish these corporations that make a profit will house a profit working out for them now. Another 18,500 families without a job. I said families possess what works in the factories men and women who have families. This is a sad day to hear about this, but they been told many a time, but many corporations and small business people Obama was reelected you probably won't have a job you got your wish go to Mr. Obama, and asking fees going to take care of you because his policies is one killing jobs I'm pretty sure this Corporation looked at every avenue to keep the doors open, but when you union leadership non-willing to work with corporate leaders this is the result, but who will get the blame for this George W. Bush, the media will not say anything about Obama policies or his presidency because if you disagree with him on anything. You're a racist. Plus get that straight right now. This is the major media and most the democratics liberal party. If you disagree with Obama you are racist. I guess we have to live with that from here on out the unions one of this man. They put them back in office suffer the consequences for all you workers at work for Hostess cupcakes are Twinkie the lost their jobs you should be more upset with your union leadership them with anyone else for not wanting to sit down and seek a solution to their problems well boys house working out for you now?
Nov 16, 2012 10:39AM
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OH NO!!! Pot is legal and now we won't have any twinkies when we get the munchies!!!! Bummer.

Nov 16, 2012 10:38AM
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where was hostess bailout to save these jobs .... thanks obama
Nov 16, 2012 10:38AM
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man.  and tallahassee thought it was tough to find a twinkie *before*...
Nov 16, 2012 10:38AM
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Of course all these jobs that will be eliminated will not be reflected in any of the the jobs reports

Nov 16, 2012 10:38AM
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I'm a union daughter. Most of my family, including myself, are or have been in a union for most of our employed lives.  I still firmly believe some unions are needed and are a great benefit to their workers and those they serve (for instance, teachers and educators).  However there are SO MANY nowadays that are riduculously greedy and unnecessary, it makes me cringe!  Seriously, you would rather put 18,500 people out of work by closing down this business than working to some type of agreement?  How does that benefit anyone?  So many crooks and idiots runnin' amuck these days....

Nov 16, 2012 10:38AM
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Day-um, union worker.  Ever heard the old saying "don't $hit in your own mess kit"?  Mensa you are not.

 

Guess those union jobs are plentiful, since you so casually squander them.

 

Maybe you can now just get on the entitlement train.

Nov 16, 2012 10:38AM
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sure says a lot for the Unions and the sheep that they fleece weekly with dues. Obama ought to be especially proud of this one. Heck if the unions and our beloved President put every business out of work then everyone left with a job will be working for the government. See the master plan here????
Nov 16, 2012 10:38AM
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Folks online are just amazing.  They have absolutely no idea of the details behind this but just start bashing unions.  Do not be ignorant... Please find out what you are talking about before typing.  If you notice (or can read) hostess has been flurting with Bankruptcy for years.  The workers have taken numerous cuts to pay and benefits and now they want to cut pay and benefits again.  At what point do you say that is enough?  Of course all you union bashing folks will just let them pay you $1 an hour and just happily keep working... Good for you.

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