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Bret Hartman / REUTERS
A box of Hostess Twinkies is seen on the shelves at a Wonder Bread Hostess Bakery Outlet on Friday in Glendale, Calif.
Hostess Brands said Tuesday night that it failed to reach a deal in mediation with the Bakery, Confectionary, Tobacco and Grain Millers Union.
The bankrupt maker of Twinkies and Ding Dongs said it will have no further comment until a hearing scheduled for Wednesday at 11 a.m ET before the U.S. Bankruptcy Court for the Southern District of New York.
A union representative did not immediately respond to a request for comment.
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The ailing company, which also makes Wonder Bread and Drake's cakes, sought permission from bankruptcy court on Monday to liquidate its business, claiming that its operations were crippled by the bakers' strike and that winding down was the best way to preserve its dwindling cash.
On Friday, Hostess closed 33 factories and announced plans to lay off 18,500 workers over an acrimonious labor dispute. But on Monday, U.S. Bankruptcy Judge Robert Drain urged the parties to come to an agreement through mediation.
Most insiders had anticipated that the two sides would come to an agreement, but the union and company could not find common ground.
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The company has blamed union wages and pension costs for contributing to its unprofitably. Hostess Chief Executive Gregory Rayburn has also said the company's labor contracts have deterred would-be bidders for the company and its assets.
Here's what each side previously agreed to:
Teamster Union concessions:
- 8 percent immediate pay cuts, which would go down to 5 percent next year
- Hostess will reduce contributions to the health plan by 17 percent
- Hostess will freeze pension contributions until 2015
Management concessions:
- Gave Teamsters 25 percent share of company stock
- Gave Teamsters two seats on the board
- Gave Teamsters a $100 million claim in bankruptcy
- Won't permanently freeze pensions contributions
- Former CEO's head on a platter: board ousted Brian Driscoll in March, 2012, after it was revealed his salary was tripled to $2.5 million at the same time he demanded steep pay cuts for workers
The next step is to go back to the bankruptcy judge, who will hold in his hands the fate of the 82-year-old company and its well-known brands.
In the coming months, several different scenarios could play out, depending on whether a buyer emerges for the company's brands.
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"There's a lot of goodwill that comes with the brand name," said John Pottow, a bankruptcy law professor at the University of Michigan. "A lot of companies could buy the name and recipe for Twinkies and make them."
Potential buyers wouldn't have to make the snack foods at Hostess 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. Among the alternatives:
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 make them 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.
Related: Relax, Twinkies likely to live on
Court filings showed 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.
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 on Monday 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 wind-down proceedings away from Hostess and into the hands of a court-appointed trustee.
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In their joinder filed Monday, 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!"
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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.
Ben Popken and Reuters contributed to this report.
On Monday, Hostess brands and its second-largest union agreed to a final mediation session in an attempt to avoid liquidation and a sale of assets. Even if the talks fail, several potential buyers are interested in the rights to Twinkies, Wonder Bread and other Hostess brands. TODAY's Natalie Morales reports.
Leave a Comment:
As sad as this sounds it is a reality. The Constitution does not guarantee anyone a job. Somewhere along the line people have believed they can force a company to pay what they want. Not in the constitution. You don't like what they want to pay you, do not work there. We are not yet a Communist Country even though the majority of MSNBC people think or dream it so. It is all the unions fault that the company has failed. Paying that much for a loaf of bread is not acceptable.
true ---- i stopped buying their products at least 20 years ago when their prices increased beyond a point i considered reasonable.
The reality is both sides were wrong and neither was willing to budge (sounds like the government). But, it is better to have a job and benefits while looking for a better job, than it is to have no income, no benefits and no job.
18,500 jobs moved to Mexico or China. N0 Union Management Jobs lost or moved to another country. Who is the biggest loser here?
I worked as a non union manager in a Chevrolet service department where the techs were with the union and it was a fight every day...they wouldn't clean their own bays, they wouldn't move vehicles out of their bays to get another one in, they wouldn't stay 1 minute late or come in 1 minute early and god forbid if they only took a 59 minute lunch...this is the real world, not 1930. Those employees (if you could call them that) only made everyday more difficult that it needed to be. Their union rep was an absoulte joke also. Some business have no business having union employees!!! And, yes..I have been there
Everybody is blaming management. Just like Obama blaming Bush.
The big problem hanging over this company IS THE UNION.
Let the company shut down which will be another nail in the coffin of this worthless and money sucking union.
These damned unions just never will get it! Greed is not only one of the seven deadly sins, it is also as addictive as heroin, and they will NEVER be able to rehabilitate themselves. I only hope HOBBY LOBBY shuts the doors on their business because of the obamacare mandate on birth control. They should stand for the morality and principle of the issue, just like Chic-Fil-A did! I hope they close their doors and put everyone on the take from the government, rather than letting the govt. take more freedoms from the people! I can believe that a country stupid enough to re-elect pelosi & reed & obama, is also stupid enough to "not have any idea" why this country is going down in flames!
Stay tuned folks! There's more to come... MUCH MORE!!!
whitebread needs his whitebread!!!!!!!!!!
Unions are failing because they keep protecting the Lazy that games the system in the companies they work for. While the people that work have to make up the slack for the losers the unions protect.
That happens everywhere.
Who the frak wants to be an IDIOT BLUE COLLAR worker anyways?
I got out of high-school, worked 2 jobs, went to school, got educated, worked my way up the food-chain and have ALWAYS been gainfully employed for 30 years, I NEVER have to ask for anything I didn't EARN, I am NOT a LAZY union scumbag, I am PROUD to be white collar!
Who really cares about a bunch of whiney uneducated bakers anyway?
Seriously?
F it, Let them close down, then we can get our Twinkies from mexico 5 for a dollar!
Nice. Maybe one day you and all your puppets will have bent over so often that you will end up sleeping in your car. I'm sure even then you will be saying glad I didn't stand up for anything or they might of taken the wheels off my car. PUPPET!!!
the SUZYQ's & ho ho's are really phucked !no more dingdongs,&twinkies with sno-balls cupcaking it with them ,the unions and managment phucked them all for good
Puppets
Unions do need to rethink their purpose and consider economic conditions. Many have given back with concessions. An instead of $26 per hour wage... some have been hired back at $14 on average.
As demanding as unions have become... many have given back. There are successful union/management agreements out there. If there is an inability for a company and union to negotiate, the failure is an option. Apparently thats what happened in the Twinkie case. If the union members voted not to accept proposed terms for a new agreement, then I believe its a bigger issue and the monkey is on their backs.
Management has a RESPONSIBILITY to manage a company thats why they are called "managers" and paid salaries, decent benefits and damned good compensation in many cases. If they fail, its just not simply the union's fault.
Everyone loses in a bankruptcy.
The supporters of the unions did not notice that anyone buying the recipe and name will not buy the company do to the union. There might be a reason why everyone is blaming the union, especially when they demand that each product is delivered on a separate truck. Even a good management team can do so good with their hands tied. Hostess could probably do the same amount of business with technology advances and 75% of its labor which would cure the money problems.
Let's see, Management prices their selves out of existence
Teamsters agree to concession's ( even though it takes 2 drivers to deliver 2 different products in 2 different trucks made at the same place to the same store) knowing that they would make it up in the future.
The bakers union refused any concessions & wanted more so go on strike. What ever happened to unions cooperating with each other in order to reach the same goal.
The blame lies with all of them. Chances are that the hostess brand will return under new owners, possibly out of the country with no unionized labor.
I see no winners here. I doubt if 18,500 unemployed employees will celebrate a good Christmas & the upper management employees won't really mind because they made theirs & will find other non physical labor employment elsewhere since they tend to take care of their own the same as union management does.
why would you believe another company would not have the same issues with an overhead which is too high ?? ----- only if they do it in another country, perhaps. ---- personally, i've thought their products were over-priced for at least 20 years. ----- and now that our govt wants people to eat less sugar in their diet, that does not help the cause for any company with similar products. ---- btw, if you read the companion article, the higher costs of sugar and other ingredients was one of the factors.
One day unions will realize that you can't pay out money you don't have, unless you the government.
Viva Grupo Bimbo!
Last checked, there are currently 16,636 auctions on eBay for Twinkies. I just witnessed ONE box sell for $41 plus $5 shipping.
For whatever it's worth, unions are like parasites. They will suck dry the host until the host dies and then they move on. There is never enought to please the unions. They expect all the profits to go to the union employees. Why go into business if you can't make a profit? There is nothing illegal about making a profit today. That is the basis for the free enterprise system. Unions were needed many years ago to stop to abuse in the sweat shops. However, those days are gone now. What we need is a laissez faire government. (For you idiots out there, go look up laissez faire in your Funk & Wagnals.)
Bottom line: Idiotic Union Demands + Interference from Government = a failed economy.
Keep bending over and we will be right back in that situation.
everyone should ask themselves what are you willing to give up to keep/save your job. that question will be on everyone's lips in a few short weeks. unless you happen to be a immigrant that is. want to FLIP OUT. visit welcometousa.gov. a government site exclusiveley for those seeking assistance like medicare, disability, food stamps etc. this country cannot survive much longer.
you can expect someone to giveup so many times before they stand up for themselves.
Thank You!!!!!!!!!
Twinkies taste like crap. Won't miss them at all.
There will be a "Twinkie" revival in the future. The winning bidder will produce the Hostess snack cakes and Wonder Bread in a "Right to Work" state, and employ drivers that can deliver all company products.
There cannot be a union sympathizer alive who can justify separate drivers from the same distribution point for deliveries. I've heard of some really stupid "work rules" but, this one takes the cake (pun intended)!
I say good riddance to any employee that doesn't think that it is in his/her best interest to do everything in their power to promote and provide a company that is financially buoyant. Give 'em what they thought they wanted - but please, don't come knocking on my door in 9 months when your unemployment benefits run out. There are jobs out there for anyone who wants to work. If you don't like your job, you have the ability to change it. That is one of the great freedoms we have living in a capitalist society. You can work where you want - not where the government tells you that you are going to work.
Dare to grow beyond the socialist/communist mindset!
Good, break the unions! The judge cant force a company to spend money they dont have to protect the liberals. Good job Unions and Democrats!
Pisspoor management is actually what did this compay in. I mean, three bankruptcies in seven years? I can't do that, only one every 10 years according to the law. No, I've never gone bankrupt, thought about it, but made a committment and stuck to it.
However, I've known someone who has and that person says, 'WTF, three in seven for them, one in 10 for me and a corporation is a person?'. And the bankruptcy was for a medical reason, nearly a hundred grand foisted on the person by - a corporation.
Teamsters got theirs, and notice they had to deliver each baked good on a different truck than the rest. Pretty good for the Teamsters, bad for the Bakers.
And you, tatooedsphinckter, tell me how when a corporation, a person by definition of the SCOTUS, can go bankrupt three times in seven years, pay bonuses to senior management through them, can blame it on the Union? I simply call it refusal to go through with moving into the 21st century.
Besides, the product no longer tasted as good as Little Debbie Snacks, didn't taste as good this year as 10 years ago. People won't buy crap, and Hostess produced crap.
If Twinkies can't make it in the land of the obese, what can? What'll the liberals eat now? This is serious!
George, I am not sure I get the connection between liberals and twinkies. I think you have it backwards; I'd bet that most obese people are poor, white, southern, unthinking conservatives who don't want Obamacare to get between them and their Hostess cakes. Sound familiar? ;)
Conservatives don't waste money on twinkies! -- We want our money to be spent on meat and potatoes, not liberal treats--