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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j0nx's picture

Did the execs and board accept a 50% cut in compensation before asking the workers to accept their cut? If not then FOAD and burn the mofo down. Scorched Earth is the new black when it comes to corporate greed.

ElvisDog's picture

Regarding 50% exec pay cut, probably wasn't offered. But that is completely irrelevant. Ask yourself, who was hurt by the union's hardball tactics (that blew up in their faces)? The union reps? Nope. They work for the union and will simply move on to their next gig. In fact, their resume is strengthened by their tough negotiating techniques. The senior management of Hostess? Nope. They will move on to their next company or simply retire with their big pile of cash. The people who are hurt by your "FOAD and burn the mofo down" approach are the rank-and-file union workers. Good job. You made your point and screwed the working stiff. Congrats.

j0nx's picture

I think not. The execs will never work as execs again and don't have nearly enough money to retire knowing their lifestyles. Burn it down works great from where I sit. Everyone here got stiffed which is exactly what needs to happen.

scatterbrains's picture

See that's that old booolshit..  they just trying to ween me off my EBT card.. aint gonna work Romney.. nice try though.

GetZeeGold's picture

 

 

Not gonna work.....period. When do we get paid?

gsferg's picture

The company had an seriously under-funded pension plan. Go figure.

Papasmurf's picture

Pension plan?  That's the company rainy day fund.

jughead's picture

No more Twinkies?  The freakin Mayans called it...THE WORLD IS ENDING!

I'm kinda a freaking out here...but please, no hugs, just throw me some Twinkies.

kralizec's picture

The zombie apocalypse will just totally suck without twinkies.  ;(

Big Slick's picture

"The zombie apocalypse will just totally suck without twinkies."

Would suck worse without Remington and Mossberg

GetZeeGold's picture

 

 

Remington and Mossberg

 

Evil corporations....makes me want to go right out and crap on a cop car.

GeezerGeek's picture

I haven't heard of Smith & Wesson or Sturm Ruger laying off anyone or threatening to go out of business. Anyone have a good explanation for this?

Maybe we should have elected Christie (?, NJ) as president. It appears that he could have kept Hostess in business all by himself.

overmedicatedundersexed's picture

in an insane world it's the sane who are nuts. buzz guess which one you are. oh you gotta phone the Whitehouse first ok.

lolmao500's picture

BALLS. SHE HAS THEM.

overmedicatedundersexed's picture

damn you lizzy damn you...oh the humanity.

williambanzai7's picture

Is this one of the new Goldman partners?

Silverhog's picture

I think those are her two pet turkeys.

williambanzai7's picture

A moment of silence for the brave photographer who took this photo and expired seconds later...

sunnyside's picture

Though an inanimate object, I mourn for the chair.

GeezerGeek's picture

For a moment I thought you were working your Photoshop magic again. Then I saw it wasn't yours.

The picture makes me want to move to NYC and vote for Bloomberg.

my puppy for prez's picture

That is just so wrong in so many ways......

Dr. Engali's picture

I don't eat Twinkies now, and this just made certain I won't in the future.

Calculated_Risk's picture

How does she shave? Wrap your brain around that one!

Temporalist's picture

I'm still working on - how does she go to the bathroom, how does she find underwear that fits, how does she get into a car, how does she walk through any door, how does she walk down stairs, how does she ever stand up?

ElvisDog's picture

Got to hand it to that woman, she is owning it. Not only did it take years to acheive those thighs, but she is bringing them to the public with that two-piece .

Cosimo de Medici's picture

I'm bringing this picture to the hearing next time the Kansas School Board insists on teaching "Intelligent Design".  Of course they'll try to argue that God bought his wind tunnel in China.

lordbyroniv's picture

This is really bad news guys.

 

Jesus.

 

End of the world.

 

:(

Catullus's picture

Another union destroys jobs.  It's how they've always operated.  Everyone involved is just lucky they didn't turn violent as they normally do. 

I guess Hostess didn't have enough workers in swing states or enough derivatitives on their debt for Obama to send in Steve RatBoy to fuck over creditors.

j0nx's picture

Greedy execs destroyed another company. FIFY. If someone shows me that the execs at Hostess agreed to a 50% cut in their pay and benefit package after asking the workers to do the same then I will humbly accept that what was done here is the fault of the unions. Otherwise fuck that.

WillyGroper's picture

Much like the austerity our elected reps will impose on themselves to save us from the fiscal cliff they created. 

semperfi's picture

PARASITES destroy the host(ess) body.  That's what they do.  And this is a microcosm of greater USA.  The 47% PARASITE NATION is destroying the host body USA. 

FUCK UNIONS

FUCK PARASITES

j0nx's picture

I'm still waiting for someone to show me that the execs took a huge hit in their compensation before asking the workers to do the same? Bueller, bueller? Down arrowing me before you show me the proof is unsportsmanlike.

Dumpster Fire's picture

Gregory Rayburn, a restructuring expert who took over as chief executive last month, said the top four Hostess executives reporting to him agreed to cut their annual salaries to $1 until the company either emerges from bankruptcy or Dec. 31, the Wall Street Journal reported. Four other executives agreed to return pay increases they received last July, six months before the company’s January bankruptcy filing.

 

http://blog.chron.com/lorensteffy/2012/04/hostess-execs-find-their-paych...

Cathartes Aura's picture

from Dumpster's link,

The committee of unsecured creditors said the company switched executive pay from performance-based bonuses to salary in what appears to be a maneuver around bankruptcy limits on retention pay, the Wall Street Journal reported.

According to the paper:

Last July, the court documents said, the compensation committee of Hostess’s board approved an increase in then-chief executive Brian Driscoll’s salary from to $2.55 million from around $750,000. The company had hired restructuring lawyers in March 2011, the creditors said, and filed for bankruptcy protection on Jan. 11.

Mr. Driscoll is no longer with the company and wasn’t reached for comment.

A spokesman for Hostess said Wednesday the company doesn’t believe the creditors’ “theory has any basis in law.” He said the executives’ salaries were increased at a routine compensation review “to align them with industry standards and because the executives were being asked to take on significant additional responsibilities associated with trying to restructure the company outside of bankruptcy proceedings.”

Not surprisingly, news of the executive pay changes outraged unions representing Hostess workers, who have been asked to accept a pay freeze as part of the company’s reorganization.

http://blog.chron.com/lorensteffy/2012/04/extreme-filling-twinkie-makers...

kind of makes the point, hmm?  funneling the fiat upwards, the new norm - let's give those execs a rousing cheer!

still, it's so much fun to defend eating "twinkies" *wink wink* and post fat people pics to mock.

Fun Club!!!

j0nx's picture

Amen brother. My point EXACTLY. FUCK these exec mofos. Like the average workers weren't being asked to take on even more responsibility but their pay sure as shit wasn't tripled for their efforts now was it. Burn it down. May all the regular workers have the strength to do what these workers did. Either way eventually they are losing their jobs anyway. May as well be on their terms and take down all the greedy execs with them before they have a chance to loot the company any more than they already have. My patienece for this shit = ZERO.

Uncle Remus's picture

Bloomburg should be happy.

DanDaley's picture

Family Feud:

Michelle is extatic over the death of Twinkies, while Barry Frank-Marshall-Davis Obama is crying for his unions.  So sad, so sad.

buzzsaw99's picture

They shouldn't call this fight club they should call it billionaire dick sucking club.

Dr. Engali's picture

Why because we believe that a business owner should be able to have a return on their investment and not overpay some schlub for watching a machine stick a twinkie in a package?

hardcleareye's picture

The old question, how much of a return on there investment should they be due???? (Remember pigs get fed and hogs get slaughtered in lean times....)

If the investors are dumb asses are they still due a "ROI"? 

Should the ones paying the price for the mistakes be the workers?  And investors/management not held accountable?

"“The crisis facing Hostess Brands is the result of nearly a decade of financial and operational mismanagement that resulted in two bankruptcies, mountains of debt, declining sales and lost market share,” the union said yesterday in a statement. The company “attempted to resolve the mess by attacking the company’s most valuable asset -- its workers.”

IMO it is not that cut and dry.  The only reason there is a union in a facility is because somewhere along the way management dropped the ball........  that is why union's exist, bad incompetent management.... (of course union workers need there own "union's" to protect them from union management, which IMO is usually extremely incompetent.....)

Just so you know the Twinkies are put in the package in a automated production line, the operation and maintenance of the automated production line is done by a trained skilled workers, not a "sclub",,,,  you obviously missed "management charm school"...... lol

A little clarification, I have never been in a union and have always sat on the management side of the table........

Cathartes Aura's picture

aye, best to concentrate the corporate wealth in a few special hands, and keep it out of the worker's dirty fists, who knows what they might do with monies. . .

rodocostarica's picture

Best to just get it over with now. Bloomberg would have shut em down anyway for the high sugar content of the products.

Zgangsta's picture

Yo Ding Dong man.  Ding Dong.  Ding Dong yo.

Bicycle Repairman's picture

You beat me to it.  I can't freaking believe someone else posted that lyric.

Cman5000's picture

Well that turned out good ...

Seasmoke's picture

I was wondering why I just paid 99 cents for a loaf of Wonder. Boy those are some well known brand names , will be strange not seeing them. Sums fucking union thugs all need to choke on a Twinkie.

Whoa Dammit's picture

99 cents for a loaf of Wonder Bread, when all of the other bread in the grocery store is $2.99 and up. That should tell you the real story. All of their product lines were underpriced given the rising cost of corn and wheat, Either management was seriously delusional about their input costs, or (most likely) it was a designed fail for one of their buddies to pick up the pieces of the company for pennies  (after they vaporized the pension fund) while hiring back senior management.