Posted on 11/16/2012 4:35:56 AM PST by Vince Ferrer
RVING, TEXAS, NOV. 16, 2012 — /PRNewswire/ -- Hostess Brands Inc. today announced that it is winding down operations and has filed a motion with the U.S. Bankruptcy Court seeking permission to close its business and sell its assets, including its iconic brands and facilities. Bakery operations have been suspended at all plants. Delivery of products will continue and Hostess Brands retail stores will remain open for several days in order to sell already-baked products.
The Board of Directors authorized the wind down of Hostess Brands to preserve and maximize the value of the estate after one of the Company's largest unions, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), initiated a nationwide strike that crippled the Company's ability to produce and deliver products at multiple facilities.
On Nov. 12, Hostess Brands permanently closed three plants as a result of the work stoppage. On Nov. 14, the Company announced it would be forced to liquidate if sufficient employees did not return to work to restore normal operations by 5 p.m., EST p.m., Nov. 15. The Company determined on the night of Nov. 15 that an insufficient number of employees had returned to work to enable the restoration of normal operations.
The BCTGM in September rejected a last, best and final offer from Hostess Brands designed to lower costs so that the Company could attract new financing and emerge from Chapter 11. Hostess Brands then received Court authority on Oct. 3 to unilaterally impose changes to the BCTGM's collective bargaining agreements.
Hostess Brands is unprofitable under its current cost structure, much of which is determined by union wages and pension costs. The offer to the BCTGM included wage, benefit and work rule concessions but also gave Hostess Brands' 12 unions a 25 percent ownership stake in the company, representation on its Board of Directors and $100 million in reorganized Hostess Brands' debt.
"We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike," said Gregory F. Rayburn, chief executive officer. "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."
In addition to dozens of baking and distribution facilities around the country, Hostess Brands will sell its popular brands, including Hostess®, Drakes® and Dolly Madison®, which make iconic cake products such as Twinkies®, CupCakes, Ding Dongs®, Ho Ho's®, Sno Balls® and Donettes®. Bread brands to be sold include Wonder®, Nature's Pride ®, Merita®, Home Pride®, Butternut®, and Beefsteak®, among others.
The wind down means the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores throughout the United States.
The Company said its debtor-in-possession lenders have agreed to allow the Company to continue to have access to the $75 million financing facility put in place at the start of the bankruptcy cases to fund the sale and wind down process, subject to U.S. Bankruptcy Court approval.
The Company's motion asks the Court for authority to continue to pay employees whose services are required during the wind-down period.
For employees whose jobs will be eliminated, additional information can be found at www.hostessbrands.info. The website also contains information for customers and vendors. Most employees who lose their jobs should be eligible for government-provided unemployment benefits.
“Another case of unions hanging themselves.”
The union here was idiotic, but there’s more to this story than the union’s stupidity. Hostess was ALREADY in bankruptcy, largely on account of $700 million of debt it had accumulated in recent years.
This looks like one of those ‘perfect storm’ cases, with mismanagement and union stubbornness leading to the collapse of an iconic American brand.
Because the union has a contract with the company. Because the union is forcing the company into bankruptcy, the union employees are basically firing themselves.
By getting rid of the union contracts, the value of the company will increase dramatically.
For the most part, management employees will be retained by the "new" company and only the best "former employees" will be offered jobs with the "new" company.
Once the company is sold, which could happen by the end of the month, production will be up and running by the end of the year.
-——I hope none of these union goons ever finds another job!
Idiots!-——
Having Hostess on a resume should mean automatic rejection for an hourly worker .
There isn’t going to be a “new” company.
Management probably have several deals in hand to sell the brands and recipes to Frito-Lay or some other such company who will use other non-union bakeries for production and their own drivers for distribution.
Hostess bakeries and drivers are now out-of-business.
Hey, we're just offering a list. What employers do with it is their business. They might find a more qualified employee.
It's my understanding from a thread yesterday that these terms were ordered (or agreed upon) by a bankruptcy court, so it's not like the company arbitrarily gave the union an ultimatum of some kind.
Unions = Organized Crime but tries to appear as an element that is for the good of the workers. They exist to collect union dues and act as liasons between the crime bosses and government for a cut of course.
Another boneheaded, stupid-assed move by a union. 18,000 jobs lost.
Congratulations for looking out for the working man. I bet the union heads still have their jobs, though.
What abject morons.
They should all be branded with a scarlet U, which will identify them as a pariah and never be employable again.
Many posters on this site said we are going to have to FIGURATIVELY burn to ground before it gets better.
Sad to see Hostess take the first hit after the election.
But it is time for Unions and the American people to start learning the lesson the hard way.
Layoffs left and right are coming because of Obamacare- or downsized hours so you are no longer full time.
And that’s what *should’ve* happened with GM and Chrysler.
If I ran that company I'd print 18,500 cards with me laying on a beach in some tax haven drinking a pina colada between 4 huge breasts with a big "Thank You" and put it in their pink slips and send it out again when their Un-employment ran out.
I think some venture capitalist group will buy the company, streamline the operations, cut costs, and then sell it in a few years.
Would love it if Bain Capital purchases the company.
Does anyone remember Eastern Airlines? I recall an Eastern picketer telling me how management was just a few weeks from ‘knuckling under’ and meeting all their demands. The guy said he was making $19.00 per hour, but was shooting for $25.00 in just a few years. This was on my outbound leg of a six day trip. Eastern was gone before I returned so I couldn’t ask how it was working out for him.
No, but when I read that they used to work for Hostess, they go into the “No Interview” and thus never to be hired pile. I cannot interview every person who applies, so I must weed them somehow. This is just another factor for not getting an interview.
Peoria, Illinois’ Hostess bakery makes Butternut bread and Hostess buns. Has been in operation since the 1890s (under a different name, of course). Would be a shame if the Butternut line was sold, but not the plant with it.
those unions should be begging for an outfit like Bain to come rescue Hostess
Then again, why should investors and management consultants demonized as greedy rich fat cats want to get involved in any company ruined by big unions?
Obama Voters. So stupid they strike themselves out of a job and brag about it.
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