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 10:34AM
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UNIONS ARE ONLY GOOD FOR LINING THEIR OWN POCKETS. SO NOW WHAT ARE ALL THOSE PEOPLE GOING TO DO? AMERICANS NEED TO GET THERE HEADS OUT OF THERE BUTTS AND TAKE MORE CONTROL OF THEMSELVES. NO ONE MADE THOSE WORKERS JOIN THE UNION. AND NOW YEARS OF PAYING THERE DUES HAS LOST THEM A INCOME. SURE SOMEONE WILL BLAME THE PRESIDENT .WE DO SEEM TO NEED SOMEONE TO BLAME..MY HEART GOES OUT TO ALL THOSE THAT WILL BE UNEMPLOYED.

 

Nov 16, 2012 10:34AM
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i`m gonna miss my twinkies  thanks alot you idiot union phuqes
Nov 16, 2012 10:34AM
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phase out unions all together..our families come first....
Nov 16, 2012 10:34AM
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wow -- the mismanagement part went right over everyones heads didn't it? They went straight to union bashing. Oh and the sell off will make those managers, stockholders, and owners a boat load of cash as they dismantle and liquidate the company... win win for them -- get a lot of money and blame the unions... 
Nov 16, 2012 10:34AM
Nov 16, 2012 10:33AM
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While I agree with the many comments that it is foolish for unions to force the closure of a company rather than reduce salaries and benefits and at least have a job, there is a larger point to be considered. And I hope you consider this not as a defense, but in the context offered. The previous CEO (Brian Driscoll) who presided over the most serious declines was paid $3.5 million per year in salary and deferred compensation to run the company into the ground. But in order to save the company, which raked up a fortune in debt due to mismanagement and NOT due to the worker salaries and benefits, workers earning an average of $12 per hour need to accept a cut to $9? And some of the people here believe that is the right thing? No, I do not think it is wise to put the company out of business rather than give concessions, but ask yourself it is fair for a guy manning an oven to have his pay cut 25% and his benefits eliminated because the CEO bungled the operation? And let's not forget, this is what Congress and the White House have planned for all of us. Social Security is solvent. I can pay full benefits for decades. More, it is entirely self-funded, relying on payroll deductions from you and contributions from your employer. It does NOT cost any tax money NOR count towards the budget deficit or national debt. So why, to avoid the so-called fiscal cliff, is the likely plan to raise the retirement age for people my age (46) to offset tax rate increases when the two have nothing in common? Regardless of who you voted for, WAKE UP and defend your rights.
Nov 16, 2012 10:33AM
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Here is another reasons that the union had there place in the past. They do not belong in today's workforce.


Nov 16, 2012 10:33AM
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Fear not you future diabetics, Hostess will resurface under another trademark... :-{
Nov 16, 2012 10:33AM
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Its not the Union that broke the company,its management getting their big fat bonuses trying to please the greedy stockholders. My brother wofked there drying truck for $15.00 an hour,You think thats to much ? What do think is a reasonable wage then ? What do think the management gets paid,its a dam site more then 15 bucks an hour. You union bashers havn't got the foggyest clue as to whats going on out there. I will say there are some problems with the unions ,but they've done a lot of good for this country and the working man.
Nov 16, 2012 10:33AM
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It would be interesting to see how much the UPPER MANAGEMENT is going to receive as they walk out the doors!!!
Nov 16, 2012 10:32AM
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Don't get rid of the TWINKIES!!!!!!!!!!!!!  I grew up on them.  My Kids grew up on them.  The union workers should be grateful to have a job......There are many people out there that would love to have their jobs, that do not have one......They need to give thanks, not grief.
Nov 16, 2012 10:32AM
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hey libs pay ATTENTION !!!!!!!!!  the next job may be YOURS
Nov 16, 2012 10:32AM
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Years ago, when my spouse was in a union (running heavy equipment for an earthworks construction company), he was the only one who hadn't dropped out of that union. His boss was just waiting for him to slip up somehow so he could fire him. When my spouse called the office to inquire about one item on his paycheck, only needing clarification, not complaining, he was fired. The union did nothing to help him with grievance. After all those years of paying union dues, all he got was a kick in the pants and a "don't let the door hit you in the rear on the way out" from the union.

 

Unions are a blight on the land. The time for unions has come and gone. My dad ( a poor farmer on a small farm) used to say the unions would someday strangle the US economy. Well, well, well... looks like he was rather prophetic....

Nov 16, 2012 10:32AM
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Well, thats what happens when bad management runs a company into the ground. Blame the union shut the company down making labor contracts null and void and sell it. The union had already agreed to concessions. This is the second time bad managment had bankrupted the company. When things are going well managment takes credit. When things are going badly blame working people.  
Nov 16, 2012 10:32AM
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I guess it's better not to have a job then to have a job.  The goverment will come to the workers aid now.  Means more votes in the next election.  Sure way to buy votes.  More debt for those working to pay off if ever.
Nov 16, 2012 10:32AM
Nov 16, 2012 10:32AM
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Another example of the wealthy telling you to go home if you wont work harder for less. ...  We'll see more of this as the owners of our country try to prove workers suck by cutting off their nose to spite their face.


Nov 16, 2012 10:32AM
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Now we will have to pay for another 18,000 unemployed simply because of thier short sighted greed.

I think if you strike and close a company - then you should not be entitled any unemployment assistance.

Nov 16, 2012 10:31AM
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I am sorry, I think a job is better than no job with the way the economy is today, those people are crazy for not working out a deal with the company.
Nov 16, 2012 10:31AM
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So, to get wage and benefit concessions out of their bosses, the union forced their boss out of business. Way to go, ****S!!!!!! What are those wages and benefits going to do for you now? I bet Unemployment bennies aren't anywhere near what you WERE making. I hope you remember the union bosses (who are still employed!) while applying for foodstamps.
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