Twinkies, Ding Dongs Maker Hostess Liquidates Following Failure To Resolve Labor Union Animosity

Tyler Durden's picture

Hostess Brands, the company better known as the maker of Butternut, Ding Dongs, Dolly Madison, Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride, and of course Wonder Bread and Twinkies, and which previously survived one multi-year Chapter 11 bankruptcy process, when it operated as Interstate Bakeries, has just made a splash at the NY Southern Bankruptcy court, for the last time, with a liquidation filing. The reason: insurmountable (and unfundable) difference in the firm's collective bargaining agreements and pension obligations, which resulted in a crippling strike that basically shut down the company. In other words, Twinkies may well survive the nuclear apocalypse, but there was one weakest link: the company making them, was unable to survive empowered labor unions who thought they had all the negotiating leverage...  until they led their bankrupt employer right off liquidation cliff. Will attention now turn to that another broke government entity, the Pension Benefit Guarantee Corp (PBGC), which will have to step in to resuscitate some 18,000 pension plans which suddenly vaporized after labor unions took their "negotiating" freedom a step too far.

From the filing:

Beginning on October 21, 2012, the Debtors began implementing the modifications to the CBAs. On November 7, 2012, the Debtors began to receive strike notices from various local unions affiliated with the BCT. On November 8, 2012, the Debtors received a strike notice from the IUOE. Between November 9 and November 13, 2012, various local unions affiliated with the BCT commenced strikes at 12 of the Debtors' bakeries. At another 12 bakeries, picket lines were set up by striking BCT workers, and certain BCT and other unionized workers at those bakeries chose to honor the picket lines by not reporting for work. As a result, production was significantly disrupted at the 24 bakeries impacted by the Strikes; however, many of the impacted bakeries remained operational to varying degrees due to management filling in for production workers and, in some plants, high numbers of employees crossing picket lines.

 

Since the strikes (the "Strikes") were commenced, the Debtors have urged striking employees to return to work. Unfortunately, at this time, thousands of the Debtors' employees continue to participate in or honor the Strikes. As a result, a sufficient number of the Debtors' baking facilities have become inoperable, and the Debtors are no longer able to fulfill customer orders or sell product at their retail stores. Because of the material impairment of the Debtors' business operations, the Debtors will soon lose access to the funding necessary to operate their businesses, and the Debtors will have triggered certain remedial provisions of the final DIP Order. As a result, the Debtors are beginning to take steps to wind down their business  operations, including the relief requested in this Motion.

In other words, the labor unions representing 18,000 workers fought the company, and the unions won... A very pyrrhic victory. Sadly, they are all now out of a job as the unionized victory just happened to lead to the terminal winddown of their employer.

As to the future of the iconic brands, fear not: Hostess' numerous brands will be bought in a stalking horse auction by willing private buyers, however completely free and clear of all legacy labor and pension agreements which ultimately led to the company's liquidation.

Now if only Hostess had raised taxes... (because they tried cutting spending, and liquidation followed).

Finally, those 18,500 new initial jobless claims next week? Sandy's fault.

Full winddown motion:

 

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L_Conquistador's picture

Here's an idea.  Why don't you reopen Hostess and pay generously?  Pay these high skilled twinkie technicians enough to raise a family, and revive their pensions so they can live well until the day they die for all of their contributions to society.

juangrande's picture

It's a cake. It's a candy. It's 2 great tastes in one!

Matt's picture

How about you create a company that makes Twinkies knock-offs, and pay all your employees whatever amount of money they feel they are worth? Then, let me know how it goes.

stant's picture

or is it so lazy wouldnt work in a pie factory, old sothern saying

ejmoosa's picture

No, this was a profit problem.

That involves both revenues AND expenses-like labor.

GetZeeGold's picture

 

 

My grandma is still without power in NY......she told me to send her regards to the union thugs. She thinks you're righteous dudes.

Sofa King's picture

Oh fuck, so much for my Twinkie Inflation Indicator...shit, now I have to modify my trading system.  Anybody have any ideas? Sure as hell can't use the lies spewed by the BLS.

Big Slick's picture

Fitting banner at the top of my ZH page: "Chevy's Giving More"

("... to you, taxpayer, from behind, as you grab your ankles, thanks to an illegal bailout")

babkjl's picture

Big Mac index.  They were introduced in 1969 for $0.49 and remain an identical product.  Has all inputs: labour, food, real estate, shipping etc.  

OpenEyes's picture

wait, don't Twinkies last forever?  And they'll certainly become more scarce soon.  Gee, I think I've discovered the next great store of value play!  You can't eat gold but you can damn sure eat Twinkies!

GeezerGeek's picture

Clearly: it's Bush's fault.

ghengis86's picture

Should have clarified.
They learn that working is for suckers in the USSA. Do the right thing (cross the picket line) and still get fucked. So the union people hate you, you still lose your job and all because you thought you could work hard and get ahead.

Gully Foyle's picture

I'm surprised brains are not exploding around here due to the conflicting positions taken.

You hate junk food and fat people and unions, but also hate a company closing it's doors, a company whos unions manufacture junk food.

Truly priceless to read this thread.

(Biden 2016 who's sorry now)

RSBriggs's picture

"You hate junk food"....   Not so much, why?

fuu's picture

He's doing his Bob Ross impression.

"First we'll take our broad brush and paint some Happy Little Exaggerations."

Dre4dwolf's picture

Wait ok

I hate fat people-Correct

I hate unions-Correct

I hate Junk-Food - WHAT? 

 

Junk food for responsible people who have self control is one of gods gifts to mankind.

 

Totentänzerlied's picture

Hate fat people: No, I hate having money stolen to pay for anyone's healthcare, particularly those who show their gratefulness by doing just about everything in their power to ensure they will be in need of much healthcare.

Hate junk food: Yes, but it is none of my business what other people eat so long as they and not I are the ones who must face the consequences of their actions.

Hate unions: Yes, they are a barrier to entry into the labor market, a compulsory extortion rackets which cannibalize their own members - while having the gall to claim to be serving their interests. They attempt to create monopolies, price people out of jobs, forbid their workers from working how and when they please, and as demonstrated here, are so fucking petty that they'd rather their members have no job than give in to management's (in this case entirely reasonable) demands. Union members are victims who have been convinced to identify with and support their victimizers, just like middle class Obamney supporters.

Biden 2016 - "What've you got left to lose! (No really, what have you got? We need to know so we can tax the fuck out of it! FORWARD!)"

Slightly Insane's picture

John was that quiet fellow over on line #7 the Dabney Taggert Ho-Ho line that they haven't been able to fix since Galt went on vacation.  They've had loads of maintenance and management folks over there for weeks, and it seems like the programmable logic controller just won't communicate.  They've replaced the controller and re-booted a dozen times and the darn thing just won't do a thing.

Big Slick's picture

"I will destroy the partially-hydrogenated animal-shortening-containing junk food that runs the world"

Slightly Insane's picture

I think this could also be titled "Name the author - How the Capitalists try to Scare the people?"

bobnoxy's picture

Who is John Galt? A character in a book of fiction widely ignored or ridiculed, written by someone who advocated self reliance but wound up taking advantage of social safety nets?

PrintingPress's picture

You can be opposed to social safety nets but only a moron would not take back at least what they put in. 

bobnoxy's picture

So I guess you're only a little opposed to social safety nets? Maybe until you're eligible to cash in? Would you take food stamps and unemployment benefits too if it meant not starving, or is that going too far?

GeezerGeek's picture

I started collecting SS earlier this year. If they had offered me an option to get all the money 'contributed' on my behalf in return for never collecting another cent, I would have jumped at it. Of course, having been taxed on it once, I would have required that the lump sum be tax-free. I figure, in purely nominal terms, that it will take me at least 10 years to break even. How long it will take to recoup the 'contributions' in terms of purchasing power is another question.

Worse, I calculated that taking money out of my IRA will result, after the first several thousand dollars. in a marginal tax rate of around 25%. Not only do I get to pay tax on my tax-deferred IRA withdrawls, but after a certain low threshold the IRS starts counting some of my SS payments as taxable. That's a lot of BS: Taxed when I earn it, taxed when I get it back.

But that's okay, really. Medicare will take care of my healthcare needs until the death panels kick in.

 

HobbyFarmer's picture

I hope the younger generation flees from roths/401k's.  Instead of paper promises, I hope they put their money into 1) developing skills, 2) land, 3) pm's, and 4) homes/materials to live independent and off-grid. 

It's been working out for me and I find I sleep way better knowing where my wealth is instead of trusting computers/papers to track it....

MachoMan's picture

that money is taken out of your paycheck pre-tax...

nufio's picture

What is ironic is that a lot of rand supporters are also very much against outsourcing.

I have read her books, and though she has expressed some ideas well. I dont support her ideas around private property and inheritance. 

Ace Ventura's picture

So are you opposed to government taking money from your pay at gunpoint, so that you can keep it and build your own 'social safety net'? Or do you think a legion of nameless, faceless bureaurats is more capable of building that safety net for you, with money taken by force from you and the rest of your fellow citizens?

Or is that going too far?

bobnoxy's picture

Well, let's see how the average individualist saver is doing.

http://www.advisorone.com/2012/03/15/investors-with-dual-retirement-plan...

As it turns out, not so good. How long do you think that average of $200k will last someone in retirement, and that's only counting those who have any savings at all, which is about half of us.

It's looking like those bureaucrats may have saved millions from abject poverty. At least your Social Security fund didn't get wiped out in the two stock market crashes that wiped out so many ''rugged individualists'' savings.

Odd how some of you look at things that are good for you and object so strenuously. Well trained fools. Maybe you think Wall Street is giving you a better shake than the government? HA!!

Central Bankster's picture

Hey buddy, atleast with the market someone has the choice to avoid the crash with their savings... You know free choice and free will? With social security, it's forced investment into a ponzi. Which, by the way, was incidently raided by politicians a long time ago. I but don't let facts and logic get in the way of your love for fascism. 

Overfed's picture

 

I was just a kid in the '80s and I still remember getting 8.3% on a simple savings account. Before all of this New Deal and Great Society bullshit, one could actually collect greater than inflation rate interest virtually risk-free via CDs, MMs, and savings plans. They also knew that they were responsible for their own future, and if they had any brains, put money away.

Government policies have destroyed savers and have made saving virtually impossible. Now most people are going to be dependent on government largess because of government largesse, and you love them for it. Progressives are the stupidest motherfuckers on the planet.

oddball's picture

The government IS wall street.

DaveyJones's picture

They're wall street, big oil, big ag....  they're essentially the exact opposite of what they claim to be.

oddball's picture

What, limited to the powers granted by the Constitution.?

 

Hahahahahahahaha

 

+1

DOT's picture

Or not having a phone !  Get real dude this is a Right !

Ricky Bobby's picture

Hey Motherfucker I am John Galt. I do not consent to be goverened by the criminals. My labor is mine - the state does not own me.

GeezerGeek's picture

As long as they have more guns than you, the state can act as if they own you with impunity.

Ace Ventura's picture

More guns than 80-100 million ANGRY Americans, each (likely) with more than one gun? Even if they did have numerically higher quantities of guns, do they have the required 80-100 million willing jackboots to tote them?

Still, I get the drift of what you're saying. All I would add is that the state can and WILL act as they do.....until they are faced with physical repercussions for doing so. When that moment arrives is still TBD.

Orly's picture

Hey, she earned those nets, mister.

:/

jdelano's picture

Widely ignored or ridiculed?  I'd call it one of the most enduring, widely read and discussed novels of the past two hundred years...  There are aspects of Rand's work that are just impossible to marginalize...especially when they are unfolding before your eyes in real time, and that is why your sort is so terrified of her.  Your whole world view is threatened by an idealogy of self-reliance because embracing it would force you to see yourself as the parasitic, teet-clinging permenant child that you are.  There's nothing else to be said about this...it isn't sad news, this is fucking fantastic. Let the shrugging begin and maybe the Obama-nation will begin to wake up...   "Love goes out the window when there's no (wonder) bread on the table...."    

bobnoxy's picture

So how's the movie doing? Not so enduring, widely seen or discussed. Weird, isn't it?

jdelano's picture

You know, all animosity aside, what exactly is your objection to Rand?  I find it incredibly difficult to understand why anybody would seriously want to be a proponent of byzantine bureaucracy/nanny government and deny the utility of self-interested industriousness.  How can you argue against self-interest as a motivator when it is clearly so effective?  Bet you love your iphone.  You think Apple would exist today and be producing the gadgets that elevate your quality of life if Steve Jobs wasn't a highly-motivated ego-maniac?  You can't help anyone else suceed until you've fought to accomplish it for yourself....that's rational egoism.  Build something, make money, reinvest all or part of it in the community...wtf is your problem with that?   If you don't want to fight for it and you just want to do the same simple thing every day for a steady paycheck, you can do that too, but why should you be entitled to the same quality of life as the guy/girl who busted ass and risked everything to build a business and employ people like you?    

UGrev's picture

Stupid people don't tend to put themselves into situations that they know will make them realize just how fucking dumb they are.  In other words, when you're eating a shit sammy from the gov't becuase you're either too lazy or too inept to make a meal for yourself, you don't want to be reminded of how bad it stinks when it's all you have to eat. 

Lednbrass's picture

Wierd? No, I would say it is to be expected. Most people have no idea or concept of what points are being made in the book or movie and do not care to. Of those that could understand it, a large percentage resent the very idea that enforced equality and living off of others is ultimately self destructive.

Intelligent people inclined to self reliance are an increasingly diminishing group, the target audience on that is inherently limited.

 

Boondocker's picture

if it were that widely read we wouldnt be having thia dicussion.....

jdelano's picture

I don't get your point here.  Meaning if people actually read it the country would be enlightened and not moving towards an uncompetitive, socialist disaster of an economy and there'd be no ongoing polemic about Rand since everyone would just think her work as benign fictional narratives that stated the obvious....?  

Saro's picture

I don't know why I'm responding to a troll, but here goes: If the man who relieves you of your wallet at gunpoint offers you a small portion of your money back to pay for a cab ride home, you take it, and that doesn't mean being mugged worked out in your favor, or that you should support mugging in general.

(Also, I am against all "social safety nets", but I advocate private citizens taking as much money from the government as possible, at any time, and for any reason. The better to bankrupt the state, IMO, and the government would probably just spend it murdering brown people overseas anyway.)

WhiskeyTangoFoxtrot's picture

 I am against all "social safety nets", but I advocate private citizens taking as much money from the government as possible, at any time, and for any reason. The better to bankrupt the state, IMO, and the government would probably just spend it murdering brown people overseas anyway.

I wish I had more than 1 upvote! Starve the beast and bleed the beast simultaneously. 

Gully Foyle's picture

bobnoxy

Oddly enough Sometimes a great Notion, with a similar and more believable story, never gets mentioned.

I assume because the majority here are illiterate, and have had someone smarter explain Rand to them.

(Biden 2016 shreddin)


In Vino Veritas's picture

What you're no doubt referencing is the half-baked "discovery" that Rand used SS. Whoever wrote that original article was either ignorant or biased - or both.  The following is an excerpt from an article Rand wrote for the June 1966 issue of "The Objectivist" magazine. She wrote this years before she fell ill - so there's no revisionist philosophy at work:

“The same moral principles and considerat­ions apply to the issue of accepting social security, unemployme­nt insurance or other payments of that kind. It is obvious, in such cases, that a man receives his own money which was taken from him by force, directly and specifical­ly, without his consent, against his own choice. Those who advocated such laws are morally guilty, since they assumed the “right” to force employers and unwilling co-workers­. But the victims, who opposed such laws, have a clear right to any refund of their own money—and they would not advance the cause of freedom if they left their money, unclaimed, for the benefit of the welfare-st­ate administra­tion.”

IMO, if you don't use any legal means to minimize your mandatory contributions, and if you don't take the opportunities to claw back what you were forced to contribute, you're cheating no one but yourself.