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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Fri, 11/16/2012 - 09:29 | 2987290 williambanzai7
williambanzai7's picture

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

Fri, 11/16/2012 - 09:56 | 2987393 sunnyside
sunnyside's picture

Though an inanimate object, I mourn for the chair.

Fri, 11/16/2012 - 10:06 | 2987432 krispkritter
krispkritter's picture

Chair? What chair?

Fri, 11/16/2012 - 10:24 | 2987503 GeezerGeek
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.

Fri, 11/16/2012 - 09:27 | 2987281 my puppy for prez
my puppy for prez's picture

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

Fri, 11/16/2012 - 09:30 | 2987291 Dr. Engali
Dr. Engali's picture

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

Fri, 11/16/2012 - 09:57 | 2987400 Calculated_Risk
Calculated_Risk's picture

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

Fri, 11/16/2012 - 10:42 | 2987567 redeals
redeals's picture

lawn service -- weed eater

Fri, 11/16/2012 - 10:53 | 2987625 Temporalist
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?

Fri, 11/16/2012 - 10:23 | 2987497 ElvisDog
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 .

Fri, 11/16/2012 - 10:25 | 2987510 Cosimo de Medici
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.

Fri, 11/16/2012 - 08:41 | 2987116 lordbyroniv
lordbyroniv's picture

This is really bad news guys.

 

Jesus.

 

End of the world.

 

:(

Fri, 11/16/2012 - 08:49 | 2987118 Catullus
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.

Fri, 11/16/2012 - 09:22 | 2987270 j0nx
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.

Fri, 11/16/2012 - 11:18 | 2987740 WillyGroper
WillyGroper's picture

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

Fri, 11/16/2012 - 09:31 | 2987296 semperfi
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

Fri, 11/16/2012 - 09:36 | 2987305 j0nx
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.

Fri, 11/16/2012 - 10:52 | 2987620 Dumpster Fire
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...

Fri, 11/16/2012 - 15:32 | 2989112 Cathartes Aura
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!!!

Fri, 11/16/2012 - 23:47 | 2990758 j0nx
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.

Fri, 11/16/2012 - 08:42 | 2987122 Uncle Remus
Uncle Remus's picture

Bloomburg should be happy.

Fri, 11/16/2012 - 08:46 | 2987133 DanDaley
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.

Fri, 11/16/2012 - 08:47 | 2987136 buzzsaw99
buzzsaw99's picture

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

Fri, 11/16/2012 - 09:27 | 2987282 Dr. Engali
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?

Fri, 11/16/2012 - 10:57 | 2987638 hardcleareye
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........

Fri, 11/16/2012 - 15:35 | 2989126 Cathartes Aura
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. . .

Fri, 11/16/2012 - 08:47 | 2987137 rodocostarica
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.

Fri, 11/16/2012 - 08:52 | 2987152 Zgangsta
Zgangsta's picture

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

Fri, 11/16/2012 - 10:17 | 2987470 Bicycle Repairman
Bicycle Repairman's picture

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

Fri, 11/16/2012 - 08:53 | 2987153 Cman5000
Cman5000's picture

Well that turned out good ...

Fri, 11/16/2012 - 08:54 | 2987157 Seasmoke
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.

Fri, 11/16/2012 - 09:50 | 2987364 Whoa Dammit
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.

Fri, 11/16/2012 - 10:26 | 2987514 ElvisDog
ElvisDog's picture

$2.99? where do you live? In my neck of the woods, regular price for bread is $5-6 a loaf.

Fri, 11/16/2012 - 14:07 | 2988694 Lednbrass
Lednbrass's picture

$2.99? In my neck of the woods its usually 2/$4.

I don't think I ever want to be near your woods, sounds like they should be left to burn down.

Fri, 11/16/2012 - 08:58 | 2987164 Massholio
Massholio's picture

Maybe the union knew they ship was going down and wanted thier free shit while they could still get it.

Fri, 11/16/2012 - 09:01 | 2987166 Nikao7
Nikao7's picture

I undertstand why there are so many who hate unions.  But not all regions are the same.  I work out of Central Illinois and I can tell you that there is no comparison to Industrial Painters here and one's say in New York,  Detroit,  etc.  I've worked with guys from those areas and was appauled at there work ethic.  They don't last long with a contractor around my parts.  Every job I've worked (minus BP refinery in Northwest Indiana) it's balls to the wall.  Along with many skipped breaks to get the job done on time(Union worker skipping a break??? Surely I jest,  NOT).  The guys mentioned above will go out of their way to drag the job out(along with gravy o.t. pay).  I've seen it first hand and heard about it often.  That shit is Greek to me.  Just sayin.....

Fri, 11/16/2012 - 09:41 | 2987323 Orly
Orly's picture

That is the mind-set that should be fostered in a union.  Unfortunately, it is not the norm.

I did a stint at the VA hospital and the guy I was working with was the union liaison for the hospital workers.  He was an MRI tech.  Come six o'clock, he told the boss, "Hey, it's my quittin' time."  Boss says, "Yeah well, such and so is running a little late, so I don't have anyone to take over right now."

At six o'clock, he got up and clocked out...leaving a veteran of a foreign war inside the MRI machine.  Boss noticed half an hour later.

Now that's what a union is to me.  Just self-entitled, lazy idiots who hide behind "rules and regulations" to get away with murder.

:/

Fri, 11/16/2012 - 09:57 | 2987398 jayman21
jayman21's picture

It sounds like a narrative from Fox News or MSNBC depending on what the color of the day is(Red vs. Blue).

Fri, 11/16/2012 - 10:05 | 2987427 Orly
Orly's picture

Absolutely true story. Same guy was caught screwing an X-ray student upstairs.  He was reprimanded.  Then he got caught having his friend in Personnel omit that from his record.  She got fired.  He's still the union liaison.

:/

Fri, 11/16/2012 - 10:05 | 2987429 Metalredneck
Metalredneck's picture

I was a steward (briefly) with United Steel & Rubber workers.  I quit after watching some of my cohorts doing coke & making a nap-room in the upper deck of the cardboard shelves.

I have seen good & bad, but the bad was fucking BAD.

Fri, 11/16/2012 - 10:46 | 2987591 DOT
DOT's picture

The Davis-Bacon Legislation gives the hint about where work effeciency is best. Compare the wages for your area (Springfield Zone) to the wages up in Chicago. 

 

I miss my pole guns.

Fri, 11/16/2012 - 09:00 | 2987167 orangegeek
orangegeek's picture

18,500 workers go down the tube and the "save their pension" government organization can't pay out.

 

See this chart of the SP500 falling?

 

http://bullandbearmash.com/chart/sp500-daily-drops-15-today-forecast/

 

It's not going to be pretty out there.

Fri, 11/16/2012 - 09:01 | 2987170 Mr. Lucky
Mr. Lucky's picture

We need to put some twinkies in  cryogenic  storage.  Then hope a cure for this situation is found in the distant future.

Fri, 11/16/2012 - 10:37 | 2987550 redeals
redeals's picture

No need. They have a half life of 5000 years.

Fri, 11/16/2012 - 13:50 | 2988609 Mr. Lucky
Mr. Lucky's picture

Touche.

Fri, 11/16/2012 - 09:02 | 2987174 topspinslicer
topspinslicer's picture

My union brothers, I, Barrack Hussein Obama, stand with you with food stamps at the ready, godspeed

Fri, 11/16/2012 - 09:20 | 2987259 semperfi
semperfi's picture

Don't forget their ObamaPhones

Fri, 11/16/2012 - 09:02 | 2987175 DavidC
DavidC's picture

I live in the UK. I tried Twinkies once, when someone brought some back from the USA. They were disgusting.

DavidC

Fri, 11/16/2012 - 09:09 | 2987196 Big Slick
Big Slick's picture

Well maybe that's why we came to the New World, DavidC.

Fri, 11/16/2012 - 09:11 | 2987203 Nikao7
Nikao7's picture

LMFAO

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