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.
Hah!
True... Didn't think of that. More Obamunist welfare moochers.
And right there is the key to the GM bailout.
If GM had been allowed to go through "normal bankruptcy" their contract with the Unions would've been null and void. This is why the Democrats wanted to bailout GM. That is is huge swath of voters they would've lost (as well as a huge amount of cashflow into Democrat Campaign coffers!)
Unions playing “chicken” with a company - with its members’ jobs at stake. Looks like it was a big loss for everyone this time.
Thanks for your replies.
SHF, I hope you are right that we’ll get our snack cakes back soon.
I actually saw a driver from a rival company to Hostess stocking the shelves at a local store today. I was tempted to say something along the lines of “this Hostess thing could be good for you eh?” but the thought of being stuck with those crappy competition treats FOREVER just took the wind out of my sails.
Besides, it’s NJ, he’s probably another union guy, and he might have beat me up or something!
Solidarity forever, right?
Or at least until we go out of business, then “you’re on your own” as Mitt Romney DIDN’T say.
“None of the look-alike products from other bakeries have quite the same flavor and quality.”
I am NOT a junk food junkie. Ask my kid, she’ll tell you it was a special day at our house when mommy would buy a bag of chips. I don’t eat fast food, or snacks, or really any of that stuff.
But to me the Drake’s coffee cake and their oatmeal cookies were the best of those foods I’ve ever had.
I said that to hubby just the other day. That coffee cake was the best, better than his mom’s, better than Entenmann’s (a big brand here in the NYC area); better than any I’ve had at any frou-frou bakery. And the oatmeal cookies were PERFECT, not too soft, not too crunchy, good oatmeal flavor but didn’t taste “healthy”, just delicious.
Not to mention I'm sure Obama called the union leadership and said "Michelle really doesn't think Americans should be eating Twinkies. Can you help her out with that?"
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.