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.
Nov 16, 2012 10:26AM
Nov 16, 2012 10:26AM

This is what Obama backed unions are going to do


Obama care is going to cause more companies to fold because of rising health cost.



The Goverment can not keep giving away things they dont have and it will soon be the tax dollars from 18500 more american people...... and the taxes from the company that is closing

Nov 16, 2012 10:26AM

Shame my dad worked for them for 40 years his previous employer also a bakery was put out of business by union demands.


Dad said the union really did lots of good in the early 50's but constant demands finally got out of hand.


We really need a Right to Work Constitutional Amendment.

Nov 16, 2012 10:26AM
Good old union workers. They sure do stick together. Right up to the time they put themselves out of work and a company out of business.
Nov 16, 2012 10:26AM
When will people get it that unions don't serve a good purpose any longer in this country. Now we have many thousands more people who pushed themselves out of a job and closed another company down.
Nov 16, 2012 10:26AM
Yep.  Unions work wonders again. 

Bad economy and they strike.  Serves them right; every one of them deserve to lose their jobs along with their parasitic union "leaders".

This must be more of that Obama magic and charisma in helping the economy get back on track.

Get ready for more...

Nov 16, 2012 10:26AM
Nov 16, 2012 10:25AM



Creditors of Hostess Brands Inc. said in court papers the company may have "manipulated" its executives' salaries higher in the months leading up to its Chapter 11 filing, in what the creditors called a possible effort by Hostess to "sidestep" Bankruptcy Code compensation provisions.

The committee representing Hostess's unsecured creditors alleges that information it has gathered suggests "the possibility" that the company converted a chunk of its top executives' pay from performance-based bonuses to salary, "at least in part to sidestep" rules designed to ensure that companies in bankruptcy aren't enticing their employees to stay on board with the promise ...

Nov 16, 2012 10:25AM
the people that work for the union will get to keep their high paying jobs, while the workers that follow them blindly will head to food stamps and welfare and a company that has been in bussiness for decades will shut down. 
Nov 16, 2012 10:25AM
You jack asses at msn post 5 labor hating comments as your best? Guess we know where you stand
Nov 16, 2012 10:25AM
Nov 16, 2012 10:25AM

Hurray for Unions!! They have screwed up another company. Remember the Air Traffic Controllers in the 80's that went on strike.....They lost their jobs to Non-Union workers.

Union Bozos!!

I know, lets have no jobs instead of a pay cut to keep our jobs.


Nov 16, 2012 10:24AM
Oh how sad. I guess you can't stuff your fat face with more twinkies. What a tragedy
Nov 16, 2012 10:24AM
Dear Mr. Union President who will suffer when the plant shuts down. As a former union worker more than once I saw how the union helped with the demise of a company. Granted there is a need for unions but they in some cases have gone to the extreme.  It is not union against company both sides need each other and it is time to put on big boy pants and stop the bullying on both sides
Nov 16, 2012 10:24AM
The stuff they made is not real food but nobody died from it !  Right ?
Nov 16, 2012 10:24AM
Ah the welfare parasites will have to resort to some other junk food to load their buggies up with....
Nov 16, 2012 10:24AM
I wonder how many of them voted for Obama?   I wonder if he's going help them now.
Nov 16, 2012 10:24AM
Just so I understand, bakery workers striked for more money and now they will lose their jobs. Right? Idiots.
Nov 16, 2012 10:24AM
Thgis closing has to do with market demand, nothing more. As usual, some companies try to improve their bottom line by taking more from workers instead of selling more product..Junk foods are going to have a rough time since people are wanting to eat healthier. You cannot get rid of obiesity and similar heath problems in the country and also have flourishing junk food companies....
Nov 16, 2012 10:24AM
Heck I bet Bloomberg and Michele wanted to shut them down anyway. Just ask the coal miners and the coal plant operators. Jobs who needs um. we have an agenda to follow.
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