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Subscribe to RSSHostess may have a longer shelf life than originally predicted now that the company and unions are in mediation. If the mediation fails, the company will go back to bankruptcy court. NBC's Kevin Tibbles reports.
Twinkie the Kid’s ride into the sunset hit a hurdle Monday when Hostess Brands, unions and lenders agreed to mediation to try to save the company, and its spongy, yellow cake, from liquidation.
The decision staves off, for a couple of days at least, Hostess’ plans to shut down its 33 factories and lay off 18,500 workers after an acrimonious labor dispute that could lead to the end of the 82-year-old company and its well-known brands such as Twinkies, Ho-Hos, Sno-Balls and Wonder bread.
During the hearing, U.S. Bankruptcy Judge Robert Drain urged the parties to come to an agreement through mediation rather than through a public, and costly, hearing. The court called a short recess while the lawyer for the baker's union phoned his client to see if the union would agree to a mediation process tomorrow.
Hostess, maker of the iconic Twinkie cake, will have a hearing before a bankruptcy judge on Monday to begin the work of shutting down and selling off its assets. Meanwhile, many loyal customers are rushing to snatch up what may be the last of its products. NBC's Mara Schiavocampo reports.
After the recess, the sides agreed to a mediation session Tuesday at 1 p.m. ET to try to work things out. If they can't resolve it, and come to an understanding of the underlying motives behind the worker strike that the company said crippled its business, the bankruptcy hearing will resume Wednesday at 11 a.m ET.
The sides will probably come to an agreement on Tuesday, John Pottow, a bankruptcy law professor at the University of Michigan, told TODAY. The biggest sign, he said, is that the Teamsters were on board.
"The Teamsters aren't pussycats," said Pottow. "If they're saying 'this is as good as it gets,' that's a pretty strong signal to me."
Wait a moment, so they were playing poker with our childhood memories all along?
"The bakery union probably thought management was bluffing," Pottow said. After Hostess filed for permission to liquidate Friday, it became clear they weren't.
Court filings show that the company is asking for permission to pay $1.75 million in retention bonuses to 19 different managers as an incentive for sticking around during the liquidation process. Hostess Brands CEO Gregory Rayburn has publicly blamed the unions for the company's demise.
The U.S. trustee, Hope Davis, an official appointed by the Justice Department to protect the interest of creditors, objected to this idea, filing a motion this morning which argued that Hostess officials "have failed to demonstrate that the proposed bonuses are true incentive bonuses and not disguised retention payments."
Davis also moved to convert the bankruptcy from a chapter 11 to a chapter 7. That would take control of the winddown proceedings away from Hostess and into the hands of a court-appointed trustee.
Cnbc's Kayla Tausche reports that Hostess and the baker's union have agreed to mediation, putting a temporary hold on a shutdown of the company.
In their joinder filed today, the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union said that "blaming the BCTGM for the Company’s liquidation is no more credible than blaming an isolated gust of wind for blowing over a tree, when it was the tree’s shallow, rotted root structure that was actually responsible."
But kids, both young and old, don't care about the blame game. They want to know whether they'll still be able to find their favorite creme-filled yellow cake treat on the shelves.
The decades-old brand is legendary in consumers' minds and evokes strong feelings of nostalgia in every bite. Some still remember the brand's signature character "Twinkie The Kid" lassoing it up on early television commercials and proclaiming "Big Delight in Every Bite!" The foodstuff has even entered the legal canon. "The Twinkie Defense" was famously, and successfully, used to argue that a suspect on trial for murder suffered from depression and that his high-sugar diet was a symptom of this mental state.
In advance of the interim hearing, Hostess Brands spokesman Tom Becker told TODAY he "wasn't going to comment on what could happen" or speculate on the proceeding's outcome.
While today's results are likely to be minimal, in the coming months several different scenarios could play out, depending on who the buyer is, or if there is a buyer at all.
"There's a lot of Goodwill that comes with the brand name," said Pottow, "A lot of companies could buy the name and recipe for Twinkies and make them." They wouldn't have to make them at the Twinkies factories either. They could make them in new facilities not burdened under old worker agreements that, for instance, required employing separate drivers for two different kinds of Hostess products rather than trucking them together.
Twinkies get absorbed by a big American conglomerate
Some of the likely suitors include ConAgra, Tastycakes maker Flowers Food, or McKeeFoods, makers of Little Debbie. These companies would likely seek to attach the Twinkies to a more efficient delivery system. For instance, does it really make sense to deliver Twinkies in their own special Twinkies trucks?
"Twinkie The Kid" trades his cowboy hat for a sombrero...
A Mexican firm, like Grupo Bimbo, which Forbes reports put in a bid for Hostess several years ago, could move production south of the border. A South American company could get access to lower sugar prices and a cheaper non-unionized workforce. Or, they could keep product in the US, but made in a non-unionized factory.
...or develops a Canadian accent.
A Canadian company called Saputo has the Canadian rights to Hostess brand products. They're not affected at all by the Hostess liquidation and they could conceivably arrange it to sell Twinkies in America.
Twinkies dies
Pure speculation: No one buys the Twinkies recipe. Fans are forced to make their own at home. Prices for unopened boxes of Twinkies skyrocket on eBay. An "Occupy Twinkies" movement launches to build an unauthorized Twinkies knockoff factory with no leaders and online-only sales... and is surprisingly profitable.
Now that Hostess' Twinkies may be going away after the company shut down production after a workers' strike, NBC's Mara Schiavocampo — a Twinkie fanatic herself — takes a look at the mad rush to get a last taste of the iconic cream-filled American snack cake.
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Hostess Twinkies’ former CEO tripled his salary earlier this year to $2.55 million while the company knew it was heading towards bankruptcy. Vulture Capitalism at it's finest.. I love it when you point your finger at your average Union Joe for trying to make a living. I hope all you Union Bashing, Mega Ditto Headed, Pinheads get what you deserve, for justifying this Bain-Style tactics of the Hostess CEO's. End Bush Tax Cuts..
wolver
I have no love of CEO however the averge union leaders pay exceeds a small businness owners. now why don't you do some research and see how many union jobs went away because of to high a demand by unions. Also check out hot the uaw screwed the delphi workers in ohio under the revamp of gm.
a little knowledge of history will show unions at first helped the working man and then screwed him in later years like the teamsters and the mafia.
look at both sides before you open your mouth.
both the greedy CEOs and the unions are at fault. not saying that CEO pay is fair by any means, but what you fail to realize is that the overbloated paychecks and benefits of THOUSANDS of union workers cost the company way way more then ONE persons ridiculous golden parachutte. the CEO paycheck did not sink the company, a drop in the bucket for a company worth hundreds of millions.
an overpaid "average union joe trying to make a living" is still an overpaid employee. period. their paycheck has nothing to do with the CEO or company profits, just a nonsense deflection. labor is calculated as an input cost based on the value of that labor as compared to the broader market for similarly skilled labor. you dont get more because the CEO got more, the company was profitable, or any other reason. you get paid for what your skills are worth to the company, and what the company is willing and able to pay.
would you pay someone twice as much per hour to cut your lawn because you have a nicer house, fancier car in the drive, or make more money? or do you pay what the going rate for getting your lawn cut? or do you get the best deal and pay the person who is willing to do the same work for the lowest price?
If you disagree with the manner in which a company conducts it's business, DON'T Patronize that Company! If you don't like the wages offered by a company, DON'T work for them! This isn't Rocket Science you know!
ted
it's easier for some to take a job and then whine
As Nancy Pelosi would say - "Let's just shut it down and then see if it works" ---
Or this "Those unemployment checks are great stimuli to our economy, and when they run out, those foodstamps will work just as well".
If you elect to not work, is that the same a quitting? If so, they should not get unemployment benefits. I am sure these brands will be picked by other companies. They will employ their people first, call back any they have laid off and then hire additional. Good luck to the folks that took the company down...
In amny jurisdictions, if you are on strike and the company closes, you are ineligible for unemployment. It is viewed as a voluntary seperation of choice.
what makes you believe another company could make these products in such a way to remain financially viable ??? --- would have the same or similar operating costs, no matter who tries it.
Make them in Mexico or Canada and you do not have to deal with the sugar tariff...that lowers the price of ingredients.
As said above, labor costs are a big driver. Without a union jacking up those costs relative to the skill set required, costs will go down. In the area of benefits, should the new buyer simply go to a 401k system instead of a pension and if they make the employee kick in for more of the healthcare cost...costs wil go down.
Plenty of ways to lower costs.
Why is this news? Hostess filled for bankruptcy in 2004 and again in 2011. They have been sold numerous times in the last 20 years. They are a poorly ran company (who pays their CEO 1.5 million a year plus bonuses).
So why is this news? Oh that's right, because the media in this country is a @!$%#ing joke and they need to sell ad space. Sure get's people reading these articles (and commenting too!)
Don't do it judge!! In fact order them to pay there workers more and reopen there plants, I NEED MY TWINKIES! Tell that lard ass CEO to give himself a generous pay cut to pay for it.
Unions were needed when they were started. The Company came in build a brick and motar building, Company built the houses (village), rented it to employees, Company built a store and sold items on credit to the workers.............so by the time the workers got their checks they owed all of it to the Company in one form or another.
My dad was in a Union for years..............was even a Union steward..............and he will tell you to this day that the Union cost him and another 40,000 people their jobs. AS my dad says the Union is only good for those that don't want to put in an honest day.
With that said..............Years ago all your pay went to "The Company"-----------now it all goes to "The Government".
I guess this is anther example of unions losing jobs for people by being stubborn and unyielding. Who wins? The union leaders? They don't lose their jobs.
Right on Cowboy! Case in point; Richard Trumpka's 2011 income - $293,750, his 2010 income - $264,827 ! He is clearly not hurting. In any case he is simply auditioning for a position in Obama's administration. He watch Andy Stern throw the SEIU under the bus for PPACA and be rewarded by a position and believes he can do the same!
This is only the latest step into America's future under this administration! Remember when Jeffrey Immelt fired 25,000 american workers and, at the same time , hired 15,000 in China? Did you notice when Fiat started their "parallel" program with Jeep in China? Both of these, over the next few years, will undoubtedly experience an increase, IN CHINA, as the American componants gradually shrink!
Unions will experience a similar fate, as their overpriced, under productive members increasingly find themselves riding the wood much more than they are employed! Hopefully some of these companies, maybe even Hostess, will re-open in America, but they will definately not be using Union Labor!
Those Hostess jobs are going straight to Mexico, where Grupo Bimbo will produce Twinkies at a fraction of the US factory labor cost.
This is all just a ploy to bust the union,,, are you people blind?
I hope they do bust the unions, they had there place in time now they do not they are hurting the country with over priced pay... if they want to have the same pay as a CEO of a company go to school !!!!
Good for them for teaching the worthless unions a lesson. Maybe next time they'll think twice about biting the hand that feeds them. Have fun standing in the unemployment line.
TO HOSTESS: PLEASE<PLEASE<PLEASE DON'T SELL TO BIMBO AKA BOMB-O. I USED TO LOVE ENTENMANNS! No appeal for me anymore. I like the CANADA connection, don't think they'd muck up my Twinkies. We've got plenty of Canada geese 'round here, let's have some Canada "Drake's" their coffee cakes are the real deal!
Well, the simpletonians are certainly out today! The bankruptcy has nothing to do with any union and everything to do with company management. A union only gets what a company agrees to give it. While Little Debbie has spent the past 10 years gaining market share in the Northeast, Hostess responded by raising it's prices. The company killed itself.
hahaha, the management didn't go on stike you fool. The uneducated, overpaid simpleton workers who followed their equally uneducated Union reps into oblivion are the idiots who struck. Go take some economic classes and learn about overpriced labor... Also, the union didn't just get what the company agreed to give it, the UNION got what is was able to extort from the company!!! Why don't you and every other idiot defending the outrageousness of striking and losing their job start your own company? Maybe then you'll understand the ridiculous sense of entitlement that Unions provide.
brian - There's always more than one side to a story. You probably should read up a little bit about Interstate Bakeries. Sounds like management hung it up about ten years ago and has just been going through the motions. If there had been any trust between the employees and Hostess they might have got their concessions. The company has pissed away any trust in the past 10-12 years.
TO HOSTESS CO: PLEASE,PLEASE,PLEASE DON'T SELL TO BIMBO AKA BOMB-O !!! Entenmann's WAS a favorite since I was a kid. The first yucky bite of my LAST purchase told the whole sordid story, they'd sold out :( I do like the Canada connection-don't think they'd muck up my Twinkies! We've got plenty of Canada geese 'round here, let's have some Canada "Drake's"-coffee cakes for real, YEAH!!!
You know your screwed when your employer is bought by a firm with either the words 'equity' or 'capitol' in its name.
When playing the blame game, everyone seems to forget that there is a check and balance system in place between unions and corporations. If the management asks too much and the union wil not stand for it, they can strike. If the union asks too much and the corporation cannot absorb it, then the company closes down.
Even the teamsters accepted the court authorized pay structure. The bakers union held out, so management decided to preserve value and shut down. That way, instead of wasting capital and resources and damaging goodwill, the company can liquidate in a manner that will get the company and its owners maximum benefit.
I believe it is managements fault. Over the years management has caved into the
unions to stay in business. Each time they
caved in just made the problem worse. Know they are paying the price. Hind
sight is 20/20 but anyone with any foresight should have seen this coming. And
believe me it is just starting, more companies will fallow.
Haha like how the Mayans say the world is going to end in 2012? Only a Republican soldier would put so much belief in something that HASN'T happened yet. Did you know it's also the rapture in 2012? Better go confess your sins! Believe me because I said so.
What's wrong with these extreme politics nowadays? For some reason Republicans believe a regulation free market will create jobs. How? So when the bean counters of these corporations send jobs to China there will be industry here to compete with foreign wages?
Hmmm... it seems like the no jobs in America coincides with having nearly everything made in China the past two decades. But... it's still Obama's fault somehow for not filling a job quota in 4 years with a recession occurring. I'm not saying it's good to lean left or lean right but at least take the fog out of your eyes.
go away, Twinkies junkies!
hope never to see the junk foods they make again!
...and the price that you pay is the loss of 18,500 jobs. All for something that you can simply not buy anyway. Hope that you are a republican, because with that type of attitude, you are the worst democrat ever!
it has nothing to do with politics, but people's health, and i don't associate myself to either party now.
when a company like Hostess keeps making high sugar, high fat and high chemical products as they have been doing without updating their products with healthier ingredients or alternatives, they just simply cannot make it in today's more health conscious climate, such as the trend that Whole Foods and many other companies like that are leading, because more people will discard their products and go buy something healthier in Whole Foods instead.
It is just a mismanagement of Hostess with their products, which costs eventually all the jobs there. I am sorry about the job loss, but I am not sorry about seeing those junk foods they make go away.
The CEO and other top execs were working for 1$ for the year. The union deal was cut wages 8% and workers would have to pay 17% of their healthcare. 2500 employees refused the deal while the rest of the 18k took it.
...and the union got a 25% equity stake in the company.
Hostess executives gave themselves raises up to 300 percent even as they were preparing to file for bankruptcy.
BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.
http://gawker.com/5961444/dont-worry-hostess-top-executives-still-got-richer-as-company-collapsed
So what...blame three execs all you want. They will be fine, they will find other jobs because they have a valuable skill set.
On the other hand, the 5000 Bakers Union members, who have a skill set that is something along the line of "I can pump sugarized goo into sponge cake" are still out of a job. Along with the other 13k employees that they took down with them.
@justoutsidedc- you say the CEos had a valuable skill. What is that? They are supposed to deal with finances. If they are so good at it they wouldn't have had to file for chapter 11 and then completely go under after a 5 day strike. That's some great talent they have! If they actually started the company then I would say they have a skill, however the current CEOs didn't start it, they simply ran it poorly and got paid well for their poor results.
Sean--
By knowing the whole financial picture of the company, they realized that it would just be devalued by a prolonged strike. Why would they expend time, money and resources, and risk tarnishing brand goodwill, in a protracted labor fight with a union. They rightly made the decision that the maximum value could be extracted from the company for the owners if they liquidated now rather than liquidating weeks or months from now. After all, Hostess is a private company and if the owners tell the officers to cut their losses...that is what will happen.
It takes considerable skill and talent to wind down a big company and make sure that all of the compliance issues are addressed while maintaining value for the owners.
Yeah because running your company into bankruptcy is such a valuable skill set. They could have taken their 2,481,265 raise and given each of those bakers a $500 bonus and saved the company.
On the contrary...navigating a company through bankruptcy is a very difficult and delicate operation where an individual has to balance many competing factors to avoid a catastrophic failure of the company.
Yeah I'd like to see that job interview.
You should make me CEO because I'm a great bankruptcy manager.
Sorry but... twinkies are awful lol.
Ho Ho Ho's....Merry Christmas Union....
The judge needs to rule that if they liquidate the vulture capital firm gets zero after liquidation, that ALL proceeds go to the employees left out in the cold by these vultures (who belong in prison or the grave).
Why? The company would still be in business if the union accepted the Court approved compensation plan that gave the union a 25% stake in the company. They just took a 8% pay cut (which was to be half restored next year) and had to pay for a protion of their own healthcare (like most people). Even the teamsters accepted this deal!
If I were one of the owners of this private company, I would liquidate too...no reason to help out a union that torpedoed the business when they could have kept it going for everyone.
Not sure how they are going out of business, they are the most expensive breads and snacks in the stores. I always get another brand and not theirs due to their high prices. Either that or I go to the second hand hostess store down the road and get near expiring stuff at a discount. Their prices were horrid, so how were they hurting so bad for money unless more and more people like me just stopped buying their brand. Sorry, but I won't miss them.
Although I have not bought a package of Twinkies in 25 or more years, I can promise I won't buy any if they are made outside of the US.
But I have to agree with others here that their prices are higher than most.
Lot of comments saying the Unions were greedy for wanting to not lower their close to minimum wage pay. But yet they fail to understand the CEOs were greedy for raising their own compensation by 3 times when filling for chapter 11. Hello, newsflash, a CEO's job is to deal with finances. If they have to file for bankruptcy then they suck at their job and don't deserve millions more on-top of their original millions. Also stop acting like the current CEO is the companies founder. The CEOs now just run it they didn't start it. Imagine if you ran a company, and the amount of money coming in was not good one year, would you give yourself a raise? Then you asked low wage employees to take a cut not just large enough for the debt but one which has to cover your raise as well? Give me a break.
I say that current management should be fired if the mediation session is successful and the bakers union can come to terms. Management was blatantly bleeding the company dry giving themselves 80% pay raises while cutting the workers salaries and benefits. Management is clearly to blame in this case.
The owners wouldn't kill a golden goose.
If you can make more (or as much) money making Twinkees than you can doing something else, you make Twinkees. These labor demands make it more likely that you're better off taking your capital somewhere else. It's as simple as that.
Hostess has been dead company walking for a while now.
http://management.fortune.cnn.com/tag/ripplewood-holdings/