Hostess, Twinkie Maker, Is Closing -- 18,500 Workers Will Lose Jobs

Hostess Brands closing Twinkies

By Tanya Agrawal

Hostess Brands Inc, the bankrupt maker of Twinkies and Wonder Bread, said it had sought court permission to close and 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 Friday.

The 82-year-old company said it took the decision to close 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, N.Y., for permission to shut down and sell assets.

Irving, Texas-based Hostess 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 Nov. 9 to Nov. 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.


Hostess Ceases Operations, 18,500 Out of Work




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Sir

The good news is that since Twinkies never decay, current stockpiles should last until 2055, experts predict....

November 16 2012 at 10:24 AM Report abuse rate up rate down Reply
silk240

18500 union workers lose their jobs. I wonder how many Union Bosses lose their job or get their pay cut.

November 16 2012 at 9:32 AM Report abuse rate up rate down Reply
1 reply to silk240's comment
Eric Niedrach

Yeah they don't they collect bonuses regardless...the guy paying his dues gets screwed over....everyone in the union is GO -UNION and rude to all others.....until one day they wake up and realize they were being butt-raped....union non-union everything everywhere has massive corruption, and unfair practices with policies and laws passed to protect them and make butt-rape legal

November 21 2012 at 11:24 AM Report abuse rate up rate down Reply

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