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 10:25AM
avatar

GREEDY UNIONS???? ARE YOU KIDDING ME! READ THIS!  

 

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
avatar
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
avatar
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
avatar

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
avatar
Oh how sad. I guess you can't stuff your fat face with more twinkies. What a tragedy
Nov 16, 2012 10:24AM
avatar
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
avatar
The stuff they made is not real food but nobody died from it !  Right ?
Nov 16, 2012 10:24AM
avatar
Ah shucks....now the welfare parasites will have to resort to some other junk food to load their buggies up with....
Nov 16, 2012 10:24AM
avatar
I wonder how many of them voted for Obama?   I wonder if he's going help them now.
Nov 16, 2012 10:24AM
avatar
Just so I understand, bakery workers striked for more money and now they will lose their jobs. Right? Idiots.
Nov 16, 2012 10:24AM
avatar
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
avatar
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.
Nov 16, 2012 10:24AM
avatar

Lets see...

Boeing just announced the layoff of 36,000 people due to obama military cuts.

Lockeed just announced the layoff of 123,000 people due to obama military cuts

Northrop Grumman is preparing an announcement of a massive layoff due to obama military cuts

Hostess is going out of business and laying off 18,500 people due to obama union thuggary

I think the list will continue to grow rapidly in the next few months.

 

 

Nov 16, 2012 10:23AM
avatar
The unions cant overcome bad management.They are scapgoats.
Nov 16, 2012 10:23AM
avatar
Obama Union buddy's are dancing in the aisle. I hope, pray, wish all CEO's who have Union workers close their companies and bring it to a close. Than maybe the US can rightfully claim Freedom.  Obama with his communist mindset wants to duplicate the direction of China.
Nov 16, 2012 10:23AM
avatar
I agree with the Union President. These dedicated workers have born the brunt of bad management for years, making sacrifices in order to help keep this company operational, only to be thwarted by incompetent management that couldn't fill a Twinkie. They should be sued for malfeasance. I only hope that the company can be resurrected and my right to enjoy a Twinkie will be restored.Bad Hostess!
Nov 16, 2012 10:22AM
avatar
That Sucks! I'll be at the grocery store as soon as it opens to stock up on Ding Dongs and Ho Hos and Snowballs and Fruit pies. I don't have to worry too much about the Twinkies though. I still have a large stash left over in my Y2K supplies.
Nov 16, 2012 10:22AM
avatar

We are going to miss our Wonder Bread and Twinkies!  I guess the union forgot to check the P&L before refusing to come back to work.  How's that strike working for you now????

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.

114
114 rated 1
278
278 rated 2
474
474 rated 3
641
641 rated 4
639
639 rated 5
663
663 rated 6
640
640 rated 7
499
499 rated 8
284
284 rated 9
122
122 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
COPCONOCOPHILLIPS9
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
KOGKODIAK OIL & GAS Corp9
CVXCHEVRON CORPORATION8
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.