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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:
It's a shame that the minority, 30% of workers or 8% of unions, killed the deal for the majority.
People should pay attention to this case and learn how a bankruptcy works according to the rules of existing law, as opposed to the GM version.
Most likely Twinkies will be produced again, hopefully within our borders.
I'm guessing that a lot of the majority helped feed the fire because they wouldn't cross picket lines. If so then that was a costly mistake.
Greedy company upper management and out of control unions once again put another company out of buisness.
How long until we have an all chinese NFL football team? Damn union workers those Football players!! My bet is a large portion of those killing the unions really enjoy a real NFL game. God those replacement games were brutal. Dont forget to take down "all" the unions not just the ones with people making $20.00 an hr take down the ones were people are making 15-20 million a year after all ALL unions breed lazy workers!! Enjoy your Tday football people this country is screwed!!!
Thank God I'm not Union that don't kill businesses. What wrong with you governments allow that Unions ruin any businesses??? You governments do nothing and let Death Cobras destroy them. Well, it's about time for anyone who is not Unions should stand up and kill Death Cobras to save any Businesses!! But nothing happened? Who idiots get idea to use Unions first place? Should be shut down once for all and never do again for thousands years to come.
I believe you. There are no patient unions in mental hospitals. How you ever got internet access is puzzling, as you are quite obviously insane.
The unions and their leader oboma is what is taking this great country down. To all you moochers who want something for nothing, great job you morons. Down with unions.
So everyone blames everyone else when the system is the issue. The media is not helping with their lies and since they are paid to do that we'll never know what's right or wrong. We'll keep hiring the guy they say to hire so they can continue to make the big dollars and we continue to suffer for their prosperity. One of my favorite lines from the media when some young child has been murdered or kidnapped, "How did that make you feel?" If I hear that from one of those low life journalists I will scream. So here we are 18,500 more people being laid off and all we can say is it's the republicans holding up the show. Maybe all of you out there blaming should look at the bills they are holding up like I did to find out the truth. In most case it takes a day of reading to get to the part where it's good for the politician that wrote the bill and bad for everyone else. It's always there in fine print. Look for the truth, don't listen to the media, they don't read much and spit out only half and leave the rest for us to figure out. How many drilling ermits have been released today? None since the election. Who is hurting because of that? Hey NYC when the Metro prices go up and it cost's more to get to work with taxes and transportation are you going to admit to a mistake? Hey San Diego metro are you enjoying the $5.60 /gal gas prices. How much are you paying in NYC? Yeah well like Obama says, "I really don't care about gas prices, maybe the automakes will come up with better alternative fuels." How nice for you. You can afford a couple new cars and a house on the big Island. If I had $11+ million in the bank because I was president and everyone loves me for lyin to them I'd say the same thing. I don't care. We have all of these people running around and calling him a fraud and they have proof. How nice, why is he still in office? Why? We need to realize that we the people are over 200 million and the politician are oin the thousands. They need back off and fix it before they need to find a new place to live and work like the rest of us.
If you wanted to save your country, you should have voted for Ron Paul in the primaries.
If he still didn't make the ballot, you should have voted LIBERTARIAN.
Any vote for a Democrat or Republican is a vote to destroy your children's future.
Here is a sample of the kind of restrictions put on Hostess by the Unions:
The work rules imposed in union contracts required the company that makes Twinkies, which also makes Wonder Bread, to deliver these two products to stores in separate trucks. Moreover, truck drivers were not allowed to load either of these products into their trucks. And the people who did load Twinkies into trucks were not allowed to load Wonder Bread, and vice versa.
Union requirements force inefficiency.
Great to see the idiotic comments about how greedy companies are when they are the ones providing the investment capital and taking all of the risks. How about the Unions offer up investment capital out of thier coffers and then see how much they like negotiating with unskilled workers who think they deserve $16 an hour plus full benefits with pension. How many of the "poor union" comments are from people who risk everything to form businesses and provide jobs??? I'm betting none of them.
Ron: Excellent post.
I probably shouldn't even comment on this since the last time I had a twinkie was so long ago I can't remember it. This is only a sympton of the coming economic crash that will be the result of re-electing a "man" who wants nothing less than the total destruction of the United States and the formation of a world government. Can you say sharia law? No I'm not talking about the idiot in charge of the US, he's only a puppet. His strings are being pulled by George Soros, the real "president". The liberal/socialist/damocraps really pulled a fast one on all the koolaid drinkers in this country. Thanks to your votes this man is that much closer to completing his planned destruction.
I think Les is right
Of course they had poor management...That's how Unions typically operate. This is the norm. These guys can't get fired no matter how lousy they are. Get promoted by mere time served and are as incompetent as the Union leaders in negotiating deals...
And on top of all this Union failure, while the bosses make more, the workers want more of everything and the company in the middle doesn't have the money to meet the demands and ends up closing down...
This is all about the Unions and how they gut a company from the inside out. That's how Unions compromise. Take until there is no more to take...
The strikers were not happy so now they can look for a job with the other 8% who are out of work. Good luck with that. And if Bimbo or someone else buys up the assets of Hostess I hope they don't hire any of the people who thought it was a good idea to drive their company out of business. Should they elect to hire them they will also eventually face the same problem. So close to the holidays too. Not a very smart decision on their part. Happy job hunting guys.
Same with Walmart, if they strike, fire them all!! Too many people need work.
I don't care who is responsible for this. I just want a hero to start making Twinkies for us again.
I have never been union and will never be. I will not pay to have a job run by thugs who protect those who do not work and bargain for more than is sustainable.
Frankly, there was a time where unions provided needed security for workers. That was in the 1930s. Since then we've passed labor laws, OSHA, NLRB, etc. Unions have outlived their usefulness and now are just an impediment to economic growth, education, and U.S. properity.
If you have ever dealt with OSHA or other Gov. entity you would know they are complete idiots, with no common sense.
You are right about unions though.
The Management team sounds like a bunch of ding dongs! Why should they receive a bonus for sinking the company?
Sounds like they should have been ousted a long time ago if they couldn't do the right thing and keep things going in the right direction!
I don't always agree with unions, but if management is trying to blame this on them, they are not only truly a bunch of sorry arse's but liars also.
Read the article and comprehend. Managament was offered a bonus if they stuck around during bankruptcy proceedings. If I were working there in management, I would jump ship immediately considering the pending doom!
So a high school Basketball coming out of HS into the NBA should only get $7.50 an hr or because they make some greedy owner super rich that union is ok? Athlete and or movie stars are really the most unskilled people in this country because its not really a need in life yet they make the most in the country or are they considered skilled because they make someone billions? Are police and Fire Men considered unskilled cause they are unionized, i say lets hire the mexican police dept for NYC police because even though they are corrupt they would be cheaper. After all all unions are lazy and need to be taken down ASAP!!! This country is screwed!!!
Jesus and a Union Guy
Two managers and a union worker were fishing on a lake one day, when Jesus walked across the water and joined them in the boat. When the three astonished men had settled down enough to speak, the first guy asked humbly, "Jesus, I've suffered from back pain ever since I took shrapnel in the Vietnam war...could you help me?" "Of course, my son", Jesus said, and when he touched the man's back, he felt relief for the first time in years. The second man, who wore very thick glasses and had a hard time reading and driving, asked if Jesus could do anything about his eyesight. Jesus smiled, removed the man's glasses and tossed them in the lake. When they hit the water, the man's eyes cleared and he could see everything distinctly. When Jesus turned to heal the union worker, the guy put his hands up and cried defensively, "Don't touch me! I'm on long term disability."
This is journalism? Why didn't they report on the issues that still separate the 2 sides? With the little information they gave us, it would appear that both sides made significant concessions. If so, why does Hostess need to declare bankruptcy?
I am glad the Union put twinkies out of business..Now Walmart employees are crying because working there is so terrible..Sniff,sniff cant have a say in anything..How about a Union Walmart?
Lets go UNION!!! ROFL
Management decided to do the Harvard Business School model and go for the big profits in the immediate quarter - in other words, give us a 75% bonus to ride this down to the earth, rather than take our normal excessive pay to keep it working. How many good companies have been destroyed by this kind of thinking - maximize profits for the board and execs, sell a product if you can, but if not, write yourself a big golden parachute agreement for staying on until it hits the ground. And to think that they go to college to learn this - most con artists pick it up off the street (or out of the gutter).
18,500 out of a job. no problem, OBAMA will take care of them. all they have to do is stick out their hands and the FED will fill it up with fresh printed money . 47% just went up to 48%.
Welcome to the union mentality, by god we won't knuckle under to the evil capitalist. So now upper management and the union bosses still have their money and benefits while the rank and file are standing in the unemployment line.
Go to Walmart and work there, let see if you dont want a Union...ROFL
While you are there, just think of how much you get paid for peanuts and the Ceo's get million dollars Bonus on top of there regular pay..You are such a moron! If you dont like it the way it is then do something about it or crawl back under your rock!
They will not be missed by anyone but the fat slobs who shovel their sugary garbage down their throats while drinking Diet Pepsi and sitting on the couch watching Oprah tell them they're not fat slobs.
As opposed to a fool like you that thinks he should be able to tell people how they should live?
He Just did, they live like 500 lbs pigs...rofl
So in your infinite ignorant wisdom, anyone that consumes Twinkies or Hostess products are gluttons? Morons!!!
How awesome would thanksgiving be without Football or a Parade? Screw those damn unions and their unskilled workers! Cant have a parade without unskilled police officers!!! Down with the Unions!!!!!
The other problem is workers bragging about how little work they do in an 8 hr. day.
They go home and brag about this to their kids and guess what their kids learn from that?