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Subscribe to RSSThe maker of Twinkies and Wonder Bread will wind down in three months, closing 33 plants and more than 500 bakeries. CNBC's Kayla Tauche reports.
It's official. Twinkies are toast, at least as far as being a Hostess product is concerned.
Hostess Brands Inc on Wednesday won permission from a U.S. bankruptcy judge to begin shutting down, and expressed optimism it will find new homes for many of its iconic brands, which include Twinkies, Drake's cakes and Wonder Bread.
U.S. Bankruptcy Judge Robert Drain in White Plains, N.Y., authorized current management, led by restructuring specialist Gregory Rayburn, to immediately begin efforts to wind down the 82-year-old company, a process expected to take one year.
"It appears clear to me that the debtors have taken the right course in seeking to implement the wind-down plan as promptly as possible," Drain said near the end of a four-hour hearing.
The judge authorized Hostess to begin the liquidation process one day after his last-ditch mediation effort between the Irving, Texas-based company and its striking bakers' union broke down.
Hostess CEO Gregory Rayburn testified at a bankruptcy hearing Wednesday that he will have to terminate 15,000 employees immediately. Most of the remaining 3,200 workers are expected to be let go within four months.
"This is a tragedy, and we're well aware of it," Heather Lennox, a lawyer for Hostess, told the judge. "We are trying to be as sensitive as we can possibly be under the circumstances to the human cost of this."
The union, the Bakery, Confectionery, Tobacco and Grain Millers Union, has complained it should not be forced into new wage and benefit cuts, on top of earlier give-backs, while top executives rewarded themselves with higher pay, and that it was "well aware" of the potential consequences of that stance.
The union said in a court filing that its sole objective was to leave Hostess with "a real, rather than an illusory or theoretical, likelihood of establishing a stable business with secure jobs."
Union president Frank Hurt was not immediately available for comment.
"This is truly a sad day for thousands of families affected by the closing of this company," said Teamsters General Secretary-Treasurer Ken Hall in a statement. "I want to assure our members that despite this outcome, they do not stand alone and their union will continue to work on their behalf to help them find new employment."
About 6,700 Hostess workers are members of Teamsters.
Related story: Twinkies are king of the Nile, despite US woes
After the company's announcement last week that it would need to liquidate after claiming that a strike by workers crippled its business, consumers cleared store shelves of Hostess products, especially Twinkies, out of fear they would never taste the spongy, yellow cakes again.
There could be a silver lining in this Twinkie tale. Hostess bankers testified to a "flood" of inquiries into buying Hostess brand names from other food makers, from stores and supermarkets, including Wal-Mart, and from investment interests.
According to testimony by a Hostess Brands adviser, many of the interested buyers have asked if they could keep some of the workers employed in the factories.
Speaking to reporters outside the courthouse, Rayburn said he was disappointed that the mediation failed and that he plans to move "extremely fast" to sell Hostess' assets. Asked which bidders may fare best, he said: "The one that pays the most."
Information from the Associated Press and Reuters was included in this report.
Hostess may be going out of business, but no need to despair. Giada De Laurentiis chats with the TODAY anchors about the topics making headlines today and demonstrates how you can make a homemade version of the beloved crème-filled treat.
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Enjoying your union?
If you read the real story, this is another example of Nero fiddling while Rome is burning. CEOs taking huge pay increases while the company going bankrupt. Then the venture capitalists wanting to raid the pension funds. No wonder the union wouldn't allow it. If someone tried to do that to you, would you allow it?
Let's stop blaming the unions for what the greedy CEOs and venture capitalists did. A little reality doesn't hurt much.
So...it all worked out then? Unions are like little mobster wanna-bes extorting money out of the wealth creators of the world under the guise of helping the "little guys" but mostly they want to get paid. The unions bosses and CEOs are the same. Greed is a normal human condition.
Want to know why allot of companies have moved out of our country. Take one look at the unions and a 2nd look at Bill Clinton for NAFTA. Plain and simple. Democrats and Unions will ruin this country and they already have a great start.
It is over people. And those of you that are holding out hope that things will get better, you can forget it. If you are one of those holding out hope,,,,,you are just a simple idiot and probably should not be able to breathe air.
Thank you Democrats and the Unions. You have done a great job.
The nicest thing I can say is this is a crock.
The democrats are glad this happened....More people on the government dole to promise things for more votes.
You people better wake up. But then again, do not worry about it. WE ARE DONE.
Open back up in a right to work state without the unions and Hostess will be profitable again and employing more people than before.
NOT! When the CEO makes stupid decisions that cost the company money then no matter how low you pay the employees the company WILL FAIL!! Why cant you idiots get that!! The CEO EVEN SAID he made bad business decisions that have forced him to close the company, AFTER he voted himself and the top execs big raises!! $2.5 million in raise he voted for himself would have solved the contract dispute. But hey blame the little guys who want a living wage of $29,000 a year.
BS these people want 70K a year stuffing twinkies, 75% retirement at 55, full medical and dental paid, it's a joke, you're stuffing twinkies you should get paid no more than $8.00 an hour. If you want a better job go to school, start a business.
Mike you do know that $8/hour is below minimum wage in some states right? Say how far could you go on $16,640/year? I dare you to try!
The article doesn't state what the demands were so state your sources!! The CEO did say HE made bad business decisions, so are you calling him a liar? Why would he lie about that?
blue...Mike doesn't stuff Twinkies. For a living or for fun. ha!
It must be good to be a Democratic politician. You run around pimping union causes that make it cost prohibitive for business to operate efficiently.
Then when business decides to go out of business rather than to hemorrhage due to unreasonable union demands, those same people that voted overwhelmingly for the Democrats will continue to vote Democrat since now being jobless, they will need to be placed on welfare.
Why is that 47% of the people believe the government and business owe them something? I am lucky to have a job, and am in no position to demand anything. Any employer at any time can kick your @$$ to the curb. Get used to it.
I would never want to be a business owner in America.
I think too many people have learned their work ethics from Office Space.
I remember OFFICE SPACE, didn't it have the office manage who did NOTHING all day except bother the employees doing their job! I think when mangagement scr$ws the company they should NOT be allowed to walk away with MILLIONS!! But those are my ethics! I guess you Cons figure rich is good no matter what people have to get it!
I think that hard work and good business decisions are the right way to make money, not giving yourself a huge raise and jumping ship!! But you guys think Donald "File Bankruptcy" Trump is a good upstanding guy, too!
Little Debbie FTW!~
There will come a day when there will be no third world to make our tube socks or iPods or Twinkies on the cheap. There will come a day when Chinese workers and Vietnamese workers and Indonesian workers will demand livable salaries and health-care. What do we do then? Train the penguins in Antarctica to assemble, since it will be the only continent left to exploit? At least until Morgan Freeman organizes them and they start demanding electric egg warmers and igloos (al least we could put the Eskimoes to work building them). Please read Upton Sinclair's "The Jungle" and tell me again why Uniions and Regulations are bad. Come to think of it, read just about anything written by Charles Dickens.
Mark that is the problem! These idiots don't read, they don't pay attention! They watch Fox News, who's biggest shareholder is a terrorist sympathizer, and they are feed propaganda from multi-millionaires with their own agendas.
They don't look at China or India, and see the horrible living conditions cause by lack of government oversight or regulations. One guy here was spouting off about Twinkies moving to Mexico, where there is not Food and drug admin. He wants to feed his kids food that could contain rat poison or worse, just so some CEO can stuff his pockets! Haven't we had enough contaminated food here?
They just don't seem to grasp that if we are not vigilant what is happening to workers in other countries, slave wages, no benefits, 80 work weeks could all happen here! They think some how companies are benevolent entities that are more than willing to pay as much as possible to retain such hard workers and it is only the lazy good for nothings that are effected by out-sourcing and in-sourcing. They seem to think that corporations WANT to pay a fair living wage and some how it is the evil unions stopping them!!
Ask any business what the biggest detraction from profit is and they will say wages! itis THE companies best interests to get those wages as low as possible!! They would pay nothing if they could get away with it! If these IDIOTS keep pushing they will find out just how LITTLE the corporations will go! Remember the rich Aussie who said anything over $2/day was a waste of money!
Why do dems envy the rich so? Dont buy anything chinese made then. As you type on your Chinese made keyboard...what was that? hypocrites
How could the employees do anything in negotiations to save this company, whose owners, CEO's and investors put it $700 million dollars in debt. The employees don't approve spending and borrowing for Hostess, the owners, CEO's and investors are in charge of finances.
oppie, face it, it is the rotten, horrible, greedy employees who put the company in debt! After all on a salary of less than $29,000/year is TOO greedy!! Why the CEO could only vote himself a 300% raise instead of 600% because of those greedy ba$tards!! How dare they want to put food on their tables and a roof over their heads!
They should take the $2/day and be happy!! It doesn't make one difference that the CEO drove the company into the ground!! He has every right to make VERY bad decisions and still walk away with millions!! He is RICH and the RICH don't make mistakes!! Got it, Oppie!
Guess it does pay to make your bread with making bread.
Sorry for the employees, but DEFINITELY not sorry for the product. What the heck is a "Twinkie" anyway? Cake "product" that's probably made with packing peanuts filled with something else that resembles whipped cream? Eat some vegetables and get some REAL food in ya! If you want something sweet, make it...FROM SCRATCH! 'nough said.
I was trying to explain to my daughter about the “old days” and Hostess Food; back when the food was “real” and not fake chemicals. Back when you could buy a Hostess Pie and it had tons of real cherries, apples, and berries in it. Of course this was back in the 60’s and 70’s. The last time I ate a Twinkie was about 13 ½ years ago on my daughters 9 birthday. Then the 20 year rule came out of my mouth; “It will be another 20 years before I put another Twinkie in my mouth!!!!!!” I was raised eating Hostess, but they changed it all to “fake chemical food”. When it leaves a bad taste in your mouth, you just do not go there again. They should of kept their original recipes and charged more for their products.
Humm, those would be decisions made by the CEO not the workers or bakers! So it was bad business decisions that drove you away from the product? Is anyone listening?
For seven years I worked literally across the street from a “Hostess Plant” that had one of those little stores you could buy the products in. I went to that little store a hand full of times, because it was all way to fake for me and I was not so sold on feeding my kid that many chemicals. Yes!!! It was the management that made bad choices and certainly not the employees that changed the recipes. I am pretty sure if Hostess stepped back in time and made their original recipes we would all be eating Hostess.
Happy Thanksgiving to everyone.
Hostess is now a statistic of why socialism doesn't work. They were taxed publically by Obama and friends and privately by the unions - most of which probably went to the Democrats anyway. RIP
edmund, How is a CEO who admits he made BAD business decisions, a statistic on why socialism doesn't work? I think that it would be a factor in why corporate fascism doesn't work.
It was Ronald Reagan who said, "
blue ---- you keep saying the same thing over and over, and part of what you are saying is true, but you're omitting an important part --- that CEO who got himself the big raise was fired. ---- that is NOT the current CEO.
This is just the start of more lost American jobs...mark my words, greed (and not just executives) are the reason 18,500 jobs were lost today and many more will soon follow.
EX. WALMART - Not part of a union yet the workforce are willing to strike the employer that pays them.....FOOLS
and may all union slaves enjoy an unemployed Holiday Season!
my best friend's step-aunt makes $74 every hour on the laptop. She has been out of work for 7 months but last month her pay was $17897 just working on the laptop for a few hours. Read more on this site...=== BIT40.COM ===
Bull@!$%#!!
Loss of another American co. I wonder if Twinkies made in China kill your kidneys, like their dog treats do?
I have been pro-union all my life. Some employees including those at Hostess probably needed a union or there wouldn't had been one representing them. BUT......you don't strike a company that has filed bankruptcy. Hello reps, there is no money to be had here. Let the company get back on it's feet. Anyone with any kind of sense must realize that the company who employs you has to make money. You should want the company, irregardless of who they are or what is made, to be making as much money as possible. An 80 year old icon now being disolved for what. Your members had to take a pay cut because it was oldered by the bankruptcy court. What a waste of time and money to those striking. Hostess could not pay more if they wanted to. The bankruptcy court ordered this. What idiots. What are the higher ups on the union getting out of this?
there's a few people commenting on here who don't like how much CEO's get paid ----- in the case of hostess, was the CEO's salary comparable to that of other CEO's ??? ---- how come you people complain about the salaries of CEO's, but not about how much some entertainment and sports figures get paid ??? ---- is it because they tend to vote for your candidate ??? ---- if so, that sounds pretty hypocritical. ---- another thing you need to consider about hostess...... how much was the CEO's salary as a percentage of gross sales, and as a percentage of total operating expenses ???
The idiots on this website blaming the unions are poorly educated, far right wing, extremist, fanatics who never worked for a living in their lives! They live off the government and always have and always will. They know what they are and they blame everyone else for it. Pathetic moochers and parasites who blame the unions for their own failures.
meanwhile in her secret lair, Little Debbie puts her fingertips together and cackles maniacally...
The last minute mediation on Tuesday was likely too little too late, if you closely examine Hostess's financials, you see the gap between revenues and costs is cavernous and too big for minor union concessions. Hostess is privately-held, but their latest 2011 year end financials are on PrivCo (private company financial research site).
See this PrivCo Private Company Financial Report on Hostess Brands. It shows just $40M in cash and over $1.4B in total liabilities. And 9 straight years of revenue declines. That pretty much says it all. Union strike were just the final nail in the coffin. Tuesday's mediation attempt just confirmed the gap between what management could possibly offer and what labor could accept was just too wide.
(Source: PrivCo: Financial Intelligence on Privately-Held Companies)
"This is a tragedy, and we're well aware of it," Heather Lennox, a lawyer for Hostess, told the judge. "We are trying to be as sensitive as we can possibly be under the circumstances to the human cost of this."
Yeah... sure Heather. As usual, all the money goes to the top... while the real workers suffer to make the big-shots rich. By the way, this company wouldn't happen to be run by Mitt Romney would it?
Exactly commiehunter, no profits then no company. The investors are right and doing the ONLY responsible thing to move their money where the profits are.
The workers had no say whatsoever and I am glad they are all unemployed now so they can see what happens when you bite the hand that feeds you.
Because of your blind hate towards unions you wouldn't take 3 minutes to educate yourself on what's happened and happening to Hostess. Hostess has been falling for 10 years in a row now, management has said that numerous times. All the while, just in the last year, the CEO has tripled his salary to 2.5 MILLION dollars WHILE preparing for bankruptcy...
So, the company is sinking (for over a decade), CEO's are getting HUGE raises big enough to employ workers for years while asking the workers to take pay cuts...
Yah, blame the union
No more Twinkies. Gotta go to the GWB and jump!