Court gives Twinkies maker go-ahead to liquidate

Jim.henderson/Wikipedia

NEW YORK Hostess Brands, the maker of Twinkies Ding Dongs and other snacks, has received approval from a bankruptcy court judge to wind down its business and sell all of its assets.

The ruling came Wednesday after Hostess failed in last-ditch negotiations to end a strike by its second-largest union.

Hostess blamed the company's collapse on striking employees belonging to the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union.

"Hostess Brands is winding down the company after a nationwide strike initiated by the BCTGM that commenced on November 9 crippled its operations at a time when the company lacked the financial resources to survive a significant labor action," the food giant said in statement.

The bakers union denies responsibility for sinking Hostess. It attributes the company's failure to management errors, claiming in a statement earlier this month that Hostess' "six management teams over the last eight years were unable to make it a profitable, successful business enterprise."

After the court-ordered mediation talks ended unsuccessfully on Tuesday, the union called the company's closing a "tragic outcome."

Hostess now has the green light to terminate the jobs of its 18,000 workers and sell off its brands. CEO Gregory Rayburn said the company will send out termination notices to its employees on Wednesday.

"Those employees now need to look for work," he said.

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Hostess going out of business

Hostess said it intends to keep roughly 3,200 employees on the payroll to help with the first phase in the company's liquidation. It expects to eliminate 94 percent of its workforce over the next four months and to complete the wind-down in a year.

In court Wednesday, Hostess said it needed to begin the liquidation process quickly to take advantage of outside interest in its brands, which a banker said could fetch up to $2.4 billion. That's about how much they generate in annual sales. Twinkies sales alone have brought in roughly $68 million so far this year.

The banker, Joshua Scherer of Perella Weinberg Partners, told the court that interest in Hostess' brands has come from companies ranging from regional bakers to major national retailers that have long sold Hostess products.

"This is a once-in-a-lifetime opportunity to get iconic brands separate from their legacy operators," Scherer said during the bankruptcy-court hearing in White Plains, N.Y.

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Twinkies maker Hostess to close

Hostess, based in Irving, Texas, has been spending about $1 million a day in payroll without any income since it halted operations last week.

The company shut down its three dozen plants late last week after it said the strike by the bakery union hurt its ability to maintain normal production. Management had said Hostess was already operating on razor-thin margins and that the strike was the final blow. The union pointed to the steep raises executives were given last year, as the company was spiraling down toward bankruptcy.

In announcing the court's decision, Hostess reiterated that its "inflated cost structure" put the company at a competitive disadvantage. It said most of those costs stemmed from collective bargaining agreements covering 15,000 of its employees.

Despite its closure, Twinkies and other of the company's products could still return to store shelves. The company has said several potential buyers have expressed interest in its brands.

[pleaseletitbeso]

All the facts, not really.


With the money that was left on the table that went to the owners

which was not much

maybe a months worth of operating capital

who is it that is going to keep that company and all of them employees going while the whole operation is re-designed to turn a profit on healthy food stuffs

Govt. bailout ??

[pleaseletitbeso]

"You miss the point - we're talking about executives being rewarded for failure while asking the work force to make all the sacrifice"

Not really, the point I am making is that with the changing attitudes in this Nation concerning food and what we eat, that company was a proverbial dinosaur.

Its tough to run a business in the black when your product is demonized by the media and the highest office in the land.

Being that the BUSINESS OWNERS had the biggest risk, it only seems fair for them to decide when to terminate said venture no matter what anyone wants to think.

I'll say it again, 5 to 7 million is barely/maybe a months worth of operating capital for a company of this size.

Spose the union members should have negotiated a bit, its a tough market out there, although I have been told that unemployment is good for a couple years at least, maybe the economic policies will kick in by then eh ?

[eroteme2]

It will be interesting to see what business the unions shut down next, now they have confirmaion of their power.

[mandiegracetaylor]

The Pharmaceutical Giants who produce Insulin took a hit on Friday in the stock exchange. It would seem the legions of patients who prick their fingers moments before unwrapping their twinkies now have one less reason to shoot themselves up - some diabetics have reported that after the initial run on the stores, finding the whole section obliterated and now waiting for the UPS man to leave them a hostess delight in an unmarked box on the porch, they have had to resort to Little Debbie. But it's just not the same......

[Keliosaw]

The union apparently isn't even aware of how damning their own argument for why the company went under is to the union. "six management teams have come in and haven't been able to make it profitable" Were all these people stupid. No they were dealt a hand with the union obligations that the union was unwilling to compromise on that prevented anyone from being able to make it profitable. The obliviousness of some people is amazing.

[skithebumps]

I just checked and you can find both Twinkies and Hostess cupcakes on Amazon.
Just tryin' to help....

[tcopeland23]

yeah and its way cheaper than on ebay! I found a good free homemade twinkie recipe at itwinkies.com that worked really well

[cubscout09]

Classic Abbott & Costello Re: Union Bakers

http://www.youtube.com/watch?v=6ib9N7L9y08

Now, go eat some turkey!

[luadda22]

joncanuk777 replies:
And it is. I think it's fair to say a large majority, like Romney, don't really give a damn about the average American; they only look after themselves.
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Really?? How about the number of Unions invested in Bain?
Illinois Municipal Retirement Fund ($2.2 million)
Indiana Public Retirement System ($39.3 million)
Iowa Public Employees' Retirement System ($177.1 million)
The Los Angeles Fire and Police Pension System ($19.5 million) Maryland State Retirement and Pension System ($117.5 million)
Public Employees' Retirement System of Nevada ($20.3 million)
State Teachers Retirement System of Ohio ($767.3 million)
Pennsylvania State Employees' Retirement System ($231.5 million)
Employees' Retirement System of Rhode Island ($25 million)
San Diego County Employees Retirement Association ($23.5 million)
Teacher Retirement System of Texas ($122.5 million)
Tennessee Consolidated Retirement System ($15 million)

Do you think the retirees under these plans would be upset at you for stating that "they don't give a damn about average people" because part of their retirement is being funded from profits gained from investing in Bain?? What a goose.

Oh p.s. Romney lost, you can quit beating him up now.

[cubscout09]

My pension is prohibited, by law, from investing in companies, like Bain, who do business with the Iranian government, in spite of the sanctions. See Bain Italy and National Iranian Oil Company.

Hmmm, if Bain's international branches are depositing money into Romney's offshore accounts, that would explain a lot, wouldn't it? I don't believe in kicking a man when he is down, but, Romney is the poster child for Tax Code Reform.

Latest deal in the House, a 2:1 ratio of Cuts to Revenue increases with the stipulation that the top marginal rate is returned to 39.5% (Simpson-Bowles)

[phwtb100]

What used to be a good thing for the workers, having a Union to protect them and watch out for them, went by the wayside long ago. In the beginning it was all about equality of the sexes and safety issues for the workers, for reasonable shift lengths and days off.

Today the Unions are no different than any other corporate giant with greedy executives and controllers. CEO's and CFO's, by any other name, are still just power hungry bottom dwellers getting filthy rich off other people's hard work. It's all about the money and how fast they can fill their own bank account by stealing from their employees and/or members.

It's a no win situation. If you don't have a Union you get paid crappy wages like employes of WalMart are suffering and if you DO have a Union you are working for a company that will eventually be forced into bankruptcy due to over extension of wage increases, undeserved bonuses and corrupted retirement accounts.

Unfortunately, now more than 18,000 people will have plenty of time, while standing in the unemployment line, to think about the last "forced" raise they received and how many people standing beside them actually deserved to get one.

[Socialistnation]

A Hostess Twinkie could survive a Nuclear War but could not survive Obama's economy.

[mandiegracetaylor]

People, Michele Obama herself had the twinkie machines pulled out of the schools, federal work buildings and begged every self respecting American parent to not hand a box of ding dongs to their adhd addled youngster parked on the sofa downloading Halo on Xbox live after letting himself in the apartment while mommy is out working 10 hours a day to feed him anything.

The Obama kiddies have never put a zinger, twinkie or ho ho to their mouths yet - maybe they'll find out the little treats on Wiki Leaks.