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.
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.
Of course all these jobs that will be eliminated will not be reflected in any of the the jobs reports
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....
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.
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.
Thats great ! Strike your way straight to the unemployment line. Another 18,500 people to take care of.
Totally agree, union's at one time were there to help the employee to make sure good working conditions and good pay. Now they have turned into nothing but criminals. As long as they (the union) gets paid they are happy, they seem to forget the people that they represent want to earn an income and without forcing the company’s doors closed. But with today’s unions taking such high cuts of pay for themselves this is costing the jobs that they are supposed to help save. I am all for equal pay and good benefits and the good treatment of the workers, however it seems that the common problem in today is GREED. We all know of economical and financial problems in the country there is no question about that; however as a united group we can turn this around as long as we understand we all have to make some sacrifices as things will get better. Trust me I have made several sacrifices myself too but it seems that unions can certainly understand this; they just need to apply it. I personally would rather have a pay cut then lose my job completely or shutdown an entire company and cause a greater spiral effect for this country.
I wonder what kind of salary and bonuses Mr, Rayburn pocketed the last few years? Maybe that worthless prick should have cut his own pay for the good of the company. Scum bag...
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.
The solid report comes a month after the retailer closed all of its Canadian operations.
VIDEO ON MSN MONEY
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.