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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Eagle Keeper's picture

This is actually part of Michelle's master plan to end obesity....   

lostcause's picture

 Don't worry! They will start making Twinkies in China very soon!

monad's picture

Soy-lent Green Twinkies

rsnoble's picture

Don't worry the new owners will soon face Obama card-check and be unionized as well. LOL.

I only know one Hostess employee and he is a real fucking dick so guess what asshole? Enjoy tent city.  And no, I don't feel that way about all of them.  He probably wouldn't be such a bad guy if he didn't have an overly flirtatious 20 yo daughter and that's as much as I care to say on that.

This case represents the ultimate in stupidity.  I'm sure many of the employees might realize this when they are dumped into an economy that have people fighting over $8hr jobs when they probably coulda made twice that with severly reduced benefits.

On the one hand there is no mistake that companies are greedy and will rape you pay wise as much as they can in most cases which is where unions come in.  On the other hand if you should choose this route let it be known that your set of skills are basically worthless in a free market so therefore your job will always be at risk despite whatever "security" bullshit the union touts.  The only way to really have security is having people offer you a good wage because you are really worth it and you can write your own ticket.

Speaking of security, here's a video that I watch often just as a reminder of our fragile being:

http://www.youtube.com/watch?v=DlMZgIyX0Rs&feature=plcp

 

Chaos_Theory's picture

Dateline February 15th, 2013--Reuters

After months of deliberations and stalled legal action by the Obama Administration to block Hostess's attempt to liquidate their company, the Department of Labor has announced that the U.S. government has seized the assets of the bankrupt company and will resume business operations in March.  All 18,000 union members who were in limbo will receive back wages, as well as taxpayer guarantees for 150% of their pension obligations.  Additionally, those workers will immediately switch to a public union status and are allowed to enact brilliant government employee initiatives like "Earned Day Off" programs in which workers work an extra hour each day to receive every other Friday off, receive 30-days of paid leave per year, plus all Federal holidays, and placed in the same healthcare program options as all other government workers.  The new government-run Hostess company will change their name to Obama's Glorious Sweet Goodness Treats to reflect the new status and enhance the brand name.  Such iconic brands as Twinkies will only have a color modification...Ding Dongs and Ho Hos will remain the same, with the exception that Ho Hos will be much larger and pop out mini Ho Hos every few minutes. 

Additionally, the International Brotherhood of the Teamsters union has negotiated a new contract with the Obama's Glorious Sweet Goodness Treats company and will receive new benefits such as 150% wage increases, pensions that include taxpayer-funded Malibu mansions, and will be allowed to violently gangbang the firstborn daughter of all private sector taxpayers (however, those women will receive "free" birth control, so it's a win-win).

All hail the glorious leader...FORWARD!

Stuck on Zero's picture

Labor unions are amazingly suicidal.  They strike against companies that hire union labor.  They do not picket or protest or try to shut down companies that export jobs or hire illegal aliens. They do not protest subsidized imports and unfair trading practices that have destroyed their membership.  Nut cases.

 

Bagbalm's picture

Don't worry about the union leaders. They represent plenty of other shops and aren't going to be out of work.

This is what happens when the first union guy leaves the shop floor and becomes a professional thugster.

NEOSERF's picture

In a nation where fully a third of its population is obese where a Twinkie maker goes bankrupt tells you how bad it is.  USPS, FHA, Hostess, American Airlines, Solyndra and countless others which are teetering on insolvency shows how bad things really are.

monopoly's picture

To blame management for all the failures is ludicrous. Not taking their side but the facts are corporations and America cannot afford these pensions and health benefits anymore. Consumers are looking for value, we do not want to pay more so less revenue. Pensions and health benefits in most industries are now archaic.These benefits are from another era that does not exist. It has to change and the unions do not understand the dynamics at play. All about union power, and it has to stop. No matter if it is Hostess or the U.S. Govt. We cannot afford to continue on this track. When will the unions figure that out? And of course there has been corporate and CEO theft. But to post that it is the CEOs fault to liquidate a company. Nope, does not compute.

ebworthen's picture

"These benefits are from another era that does not exist."

You mean that era where people could afford to go to the Doctor and retire at 65?

Absinthe Minded's picture

The privately owned company I work for was bought by Owens Corning. We had the best benefits imaginable, I thought. $75 a week for a family plan that covered everything with no copays. Now with OC we have the typical crappy health plan every one else has been used to. Sorry, but it sucks.Out of pocket used to be $3600 now it's $8500. Now I know why people strike. My small private company could afford great benefits, they should get better with the purchasing power of a huge corporation. Nope, just another top heavy shitty corporation. Everything we do now has to go through a bunch of dumb ass engineers who have to put their two cents in to justify their existence. Talk about half witted, slow moving, red tape bound beauracracy. This company is a joke. God help us.

NEOSERF's picture

Bring it on...18,000 unemployed workers means I have to work an extra 3 hours a week to support you but good work on shutting down those plants...hope you can get a Starbucks job making those little pastries.

Crtrvlt's picture

right and this has nothing to do with the fact that their revenues have fallen  from about 2.8 bln in 2008 to 2 bln now or the fact that their margins have collpased because of rising input costs

 

either way, less fat people and the life of medicare just fell a little more

Monedas's picture

The Hostess, Dolly Madison, wanted his Ding Dong .... all she got was a Twinkie !  She was one mad woman !

Mad Mad Woman's picture

Hostess was Bain-ed. Insurmountable debt piled on by owners: private equity firms & hedge funds. Owners loaded up the debt & cashed out millions of dollars and put the money right into their own pockets. Hostess was Bain-ed!!

surf0766's picture

"Workers of the world unit isn't just a slogan anymore it is a way we are going to have to do business." /s

 

Asswipes !

Eagle Keeper's picture

I see this as the visible start of a major inflation cycle. The input costs are now catching up to their maximum that could be absorbed before raising end prices to consumers. Gvt has done a pretty good job so far of masking the enevitible. Sure, wages got to start going up soon but mfg's margin has been so thin for so long they either need to raise prices or shut their doors. Either way results in the same outcome, especially for the first to drop. Hold on to your hats, inflation is about to shift into a higher gear and there's no reverse...

QE49er's picture

This may be the Archduke Ferdinand moment of WWIII

surf0766's picture

Now all the walmart workers will walk out Black Friday. Fire them all. Someone else will do the job

semperfi's picture

its time for all the TAXPAYERS to walk out and send a message to the parasites that says FUCK YOU

Bastiat's picture

   Unions will send a local on a kamikaze strike to preserve the collective national bargaining power.   Concessions are contagious. 

 

edifice's picture

Like Woody Harrelson in "Zombieland," all I want is a Twinkie.

 

Not really.

Monedas's picture

If I knew this was coming .... I would have voted for Romney !

Chaos_Theory's picture

All Robot would have done is ensure the bones were picked clear, and production costs lowered by the miracle of offshoring.  That would still leave you with 18,000 less American jobs, toxic sweet products, and little Chinese pubes packed into my Ding Dongs!

The REAL horror is the irony of what this does to the great American Dream....by which I mean the dream of living in your mancave for two-years on the unemployment insurance dime, while doing nothing but mastering COD Back Ops II, drinking cheap American beer, smoking Colorado's finest, and eating too many Ding Dongs and Twinkies

Who says the American Dream isn't dead?  Liars...that's who. 

icanhasbailout's picture

If the workers don't lynch their union leaders, then they deserved what they got.

semperfi's picture

Hope & Change  vs.  Rope & Chains

 

2discern's picture

A moment of silence is in order. Twinkies will live forever in the hearts (and stomachs) of true Americans.

dark pools of soros's picture

ZIRP: the poison pill for pensions... thus unions...    don't think this isn't part of the plan

collateral damage of defunct companies be damned

 

 

hampsterwheel's picture

Come on people, you have to start thinking like the system - this will not be allowed to stand - there is no free market - companies cannot simply fire people or raise prices, what are you thinking.....

Here is what will happen - the Judge will throw out the case - the board of Directors will be replaced and the Union will get its demands and everyone will go back to work -

You seriously don't think the system will allow a default of anykind - Greece cannot get out, nor can the twinkie -

Matt's picture

Are there hundreds of billions of dollars in Credit Default Swaps for Hostess? If not, then they are certainly allowed to be liquidated.

No Twinkies, but Wonder Bread, Jos. Louis and some other favourites live on in Canada:

http://www.theglobeandmail.com/globe-investor/snack-giant-hostess-shutte...

killallthefiat's picture

Sometimes I read interesting news articles to the kids.  This morning I read this one and my 9 year old daughter. She said, recognizing the value of scarcity, "We better go get some today."  From the mouths of babes, the Ben Bernank could learn a thing or two.

chenn's picture

Well, at leat now we know what the end of the Mayan calendar represents.  No more twinkies.

j0nx's picture

I would gladly accept being shitcanned as an ordinary worker if it meant that the greedy board and executives were also out on the street looking for a new job with that big black mark on their resume. GL finding a job as another executive if you came from Hostess. The airlines ought to be doing the same thing. No more fucking austerity for the average worker until senior corporate executive pay comes in line to 20x average worker pay where it belongs. This blaming unions shit for the failings of companies needs to stop. Corporate greed and asset stripping at the senior level is what causes these companies to fail and the union demands are just a convenient excuse. The simple fact is that the wall street types/corporate execs want everyone else but them to accept austerity and the workers have had enough. Burn the mofo down. Do it to all companies that play by these rules.

Seasmoke's picture

the higher up the ladder, the harder the fall

Monedas's picture

Who's happy ?  Bloomberg and Michelle are happy ! Knock on wood !   Get ready for brown rice snack cakes filled with creamed spinach !

Dr. Venkman's picture

Your Honor -- the Debtors' counsel, Debtors' Co-Counsel, Creditors Committee Counsel and Co-Counsel, Counsel to Secured Creditors/DIP Lender, Financial Advisors to the Debtors, Financial Advisors to the Creditors Committee, etc. are shocked that the plan were worked on for 10 months lasted a mere 25 days. Please consider this an emergency motion to increase the carveout for professional fees lest we attorneys be forced to feed our families with the Debtors unsold inventory. Life in the SDNY is expensive.

EverythingsSuper's picture

This is actually a GOOD thing! Hostess made some of the most unhealthy, GMO food in the USA. And Wonder bread?!?! I mean common, only Americans can eat something that resembles tasteless soft cotton mush made with from GMO Dwarf wheat that causes addiction (google it). I'll take my German pumpernickel or my Latvian real dark, yeast bread ANY time over any twinkie crap.

Frank N. Beans's picture

this leaves the door open for another company to come out with their own Twinkie knock-off.  Just don't call them Twinks. 

 

hero HNL's picture

Is the company seriously going away???????

 

I really enjoyed them since I was a kid......will miss them a lot.

 

 

hero

resaci's picture

 

 

 

Life in the UAW (probably any big union)

 

 

  • 20% - conscientious hard workers
  • 60% - follow the leader - don't ask me to think
  • 20% - USELESS FUCK-OFFS (most union reps from this group)

Union reps spend their time bailing out the 20% FUCK-OFFS

Management spends their time dumping ALL THE WORK on the 20% - conscientious hard workers until they TURN INTO THE OTHER 80%

 

gwar5's picture

Don't be a ding dong. Hoard twinkies before they're gone.

 

Sad to see this happening. Hostess started during the Depression, now it's gotten too tough. Employees are hitting Wal-Mart next. At least WMT saves the average family $3000. Gov can't do that.

 

Monedas's picture

Meats, sweets and treats .... advanced Anglo brains don't need all that Slavic fiber and German animal feed !

KCMLO's picture

I have a good friend nearing retirement age that was one hit by this.  I don't know much about the company and how they operated but I did get to see first hand what they did to him:

1.  Admittedly he was decently well paid when he was even able to work, made about $20 an hour loading trucks.  However, the union constatnly blocked him from being able to work full hours. 

2.  His exact position opened up at a bakery within a mile of his house, since the union required more senior people to have first dibs on the job he had to quietly train 3 (THREE!) more senior employees trying to take the position.  Each of the three were unable to perform the duties of the position.  Namely this would be mental math, inventory, and loading trucks for delivery.  That astonished me.

3.  At every step of the way the union was constantly obstructive.  I never once heard him complain about the company, not a single time, it was always the union.

4.  The union even kept them in the dark about these proceedings and that they were heading over the cliff.  His word from the union as of 48 hours ago "We're still negotiating."

indio007's picture

Unions are hardly the problem. The problem is they changed their product and it sux. Not to mention charging 2 times as much as their competitors for an inferior product.

 

Hotess cupcakes are all dried out and barly taste like chocolate. Twinkies are bland as shit and the frosting isn't fluffy anymore. It's more like paste. 

Monedas's picture

Maybe union bosses could start up their own snack company .... non-union shop, of course !  LOL   (Unions are) Proletarian, brain dead Zimbabwian Socialist filth !