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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ElvisDog's picture

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

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.

Massholio's picture

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

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.....

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.

:/

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).

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.

:/

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.

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.

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.

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.

redeals's picture

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

topspinslicer's picture

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

semperfi's picture

Don't forget their ObamaPhones

DavidC's picture

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

DavidC

Big Slick's picture

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

Orly's picture

He would prefer a breakfast of bangers and kidneys with a side of Spotted Dick.

Legolas's picture

Stick to your Turkish Delight, then.  I'd take a twinkie over that any day.

I'm convinced that Turkish Delight is bleached, dried barf; probably devised by a Queen for her subjects.

moonman's picture

Thats a surprise you would think they would be easy to eat for you rotten toothed Brits

Cosimo de Medici's picture

There was a world survey taken a few years back to determine the World's Worst Cuisine.  You may be proud to know the UK came in 1st.  Philippines and Russia rounded out the top three. 

Take the Twinkies.  It's an improvement.

Temporalist's picture

Says the people who invented deep frying Twinkies and Snickers to make them taste "better".

wonderatitall's picture

about time. so tired of the producers and owners complaining. close it down, go on strike. obama and the crime lords known as "union goons" will not stop unless on break destroying and looting. let them fend for themselves , that should be a nice spectacle....bastard union thugs stabbing each other in the back for 5 cents makes a nice festival for me. 

as our gubmint lords of corruption and fat union goons shout in rage i can laugh and enjoy myself. 

end the fasciti loving democrat dictatorship and ignore the useless idiots of the repubs. 

its time for a 3rd revolution and it begins by saying fuck you obama and bankers

semperfi's picture

"obama and the crime lords known as "union goons"

formally known as The Kenyan Thug and his Union Thug Army

holdbuysell's picture

It's events like these that scream with flashing lights that the standard of living in the US will drop, regardless of how much kicking and screaming ensues.

Got Math?

flapdoodle's picture

No more Twinkies, Ding Dongs and Ho Hos.

 

Truly a black day in history...

dobermangang's picture

I love my Ho Hos.  They are so goooooooooooooood.

Downtoolong's picture

This sounds like a case for Goldman. I thought this was precisely the kind of problem they exist to solve. I can’t believe Goldman isn’t able to come up with some kind of derivative based on the Euro, interest rates, and carbon credits, to help them out of this jam.

As for me, I’m going out to buy a couple of cases of Twinkies today. They’ll be a collector item in five years and I’ll be selling them on eBay for $50 apiece. Surely you don’t think the fat fucks who typically buy these things have the willpower to avoid eating the last ones they own.  

redeals's picture

And the scary thing is that in five years the twinkies would still be edible. Or at least as edible as a twinkie can be.

lordbyroniv's picture

I draw the line at Table Talk pies....

 

if those cease to exist...

 

I am leaving America.

 

Fuck this shit.

Big Slick's picture

DavidC says England is nice

Metalredneck's picture

No free phone, but we do have health care.  Bring a toque & shovel...

Oldrepublic's picture

lots of interesting comments over at the wall street journal blog

on this company http://blogs.wsj.com/corporate-intelligence/2012/11/15/hostess-strike/ta...

 

j0nx's picture

It's always austerity for the little guy while the execs get bonused to the 9's and drive up in a Ferrari on Jan 1st. Perhaps scorched Earth is the best policy now for all concerned. At least that way both sides get the shaft and this insanity ends sooner. If there is one silver lining to this cloud it's that the execs involved will be humping the street looking for a new job along with all the union grunts and all of them will have a big black mark on their resume labeled HOSTESS.

Temporalist's picture

Yeah!  And while we're at it why not just have flash mobs of shoplifters and looters because why should other people have things and why should companies be allowed to sell things that other people can afford to buy when others can't?

 

Oh?  That already happens?  Whocouldanoed?

Flash Mob in NYC's Bergdorf Goodman

http://www.youtube.com/watch?v=rFP7cXpLwP0

 

Urban Youths Loot $3,000 Worth of Designer Jeans in Chicago Flashmob

http://www.youtube.com/watch?v=8f6opssNxLY

 

Shoplifter Flash Mob

http://www.youtube.com/watch?v=ucLGpHeWU5I

 

Flash Mob: Urban Youths Pillage Walmart In Jacksonville

http://www.youtube.com/watch?v=4I_w60PzXoE

 

Urban Youths Pillage Convenience Store in Portland, Oregon (Third Flashmob in a Month)

http://www.youtube.com/watch?v=n2pDWkCJ1T8

 

Another Flash Mob Robbery, This Time in Dallas

http://www.youtube.com/watch?v=QCICkfL1qpY

 

Nordstrom Flash Mob / Case # 12-031295

http://www.youtube.com/watch?v=i604Bs4GoM4

j0nx's picture

Nothing you posted makes any sense and is not relevant AT ALL to my point.

AU5K's picture

Why is hostess allowed to fail, and other companies are bailed out?

justanothersucker's picture

Their management contributed to Romney?

ElvisDog's picture

Hostess should have made twinkies and solar panels or ho-hos and student loans. Then, they would have had no problems getting the govt bailout.

Matt's picture

Ironically, the maker of Twinkies is NOT Too Big To Fail. 

Big Slick's picture

"Why is hostess allowed to fail, and other companies are bailed out?"

Because 'Big Twinkie" has crappy lobbyists

justanothersucker's picture

Well, at least the BLS won't have to struggle to explain NEXT week's poor jobs report.  RIP Twinkies.  I'm going to Costco, LOADING UP and Ebay here I come!

HurricaneSeason's picture

This isn't over yet. Twinkie workers have been a member of the Gambino crime family for 60 years. We'll see what the judge thinks when he finds a horses head in his bed. "Back to work Twinkie men!"

toomanyfakeconservatives's picture

I wish the same would happen to public schools and teachers unions. My property tax bill would evaporate.

AynRandFan's picture

Nice try, but public sector unions can just keep blackmailing us until we comply.

khotel's picture

What demands were the unions making that Hostess was not willing to meet?  I haven't seen any details.

fijisailor's picture

Well good riddance.  This junk food fest can fade into oblivion.  They get about the same rating as a coke dealer (both types).

Seasmoke's picture

If they just could have held on for six more months they could have got $100 for a loaf of Wonder.

Pig Brotha's picture

I've been on both sides of the union/management scenario in NYC hotels, it is a fuckin' disgrace. You have illiterate pieces of shit barely able to speak the English language being treated as if they were untouchables because they are in the union. How about some dumb skill less fuck making $30+ per hour to wash dishes, or should I say feed and remove the dishes from a Hobart dish machine and do nothing but complain. Once these maggots are hired and enter the union it is nearly impossible to get rid of them regardless of work performance, attendance etc. As management we constantly try to create a better work environment (new cafeteria with free food, new lockers rooms, new uniforms, employee recognition days etc) and it is all a waste of time. The moment anything that could remotely be construed as a slight against a union member occurs, all hell breaks loose and they start screaming (literally) about their rights and call the business agent in. Unless you experienced this bullshit for yourself you have no idea how bad things are. The unions are destroying my industry, imagine having a 90% occupancy rate and still barley being able to keep the doors open. Unions cater to the least among the masses, those who don't give a fuck nor have the intelligence to realize they are destroying themselves.