No More Hostess

[Intrepidation]

(Reuters) - Hostess Brands Inc, the bankrupt maker of Twinkies and Wonder Bread, has sought a U.S. court's permission to go out of business after failing to get wage and benefit cuts from thousands of its striking bakery workers.

Hostess, which has about $2.5 billion in sales from a long list of snack cakes and breads, filed the request with the U.S. Bankruptcy Court in New York early Friday morning.

The Irving, Texas-based company said the liquidation would mean that most of its 18,500 employees would lose their jobs.

Hostess immediately suspended operations at all of its 33 plants across the United States as it moves to start liquidating assets, it said.

"We'll be selling the brands and as much of the infrastructure as we can," said company spokesman Lance Ignon. "There is value in the brands. But some bakeries will never open again as bakeries."

Ignon said the company was making final deliveries on Friday of products made Thursday night. Hostess's top-selling products are its chocolate cupcakes, cream-filled Twinkies cakes and its powdered sugar and frosted "Donettes."

Entrepreneurs on auction site eBay are asking as much as $100 for a box of 10 Twinkies - plus $5 shipping - according to one listing that went up shortly after the company's liquidation filing. "Soon To Be Gone Forever," the listing reads.

Hostess blamed burdensome wage and pension obligations for its financial woes. It said a strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which began last week, was the latest of a series of labor troubles that had crippled the company's ability to produce and deliver products at several facilities.

A few workers were still walking picket lines early Friday morning, many expressing hope that some of the Hostess operations might survive. They blamed what they characterized as "Wall Street" management for the company's demise.

"The people who are running this company are not interested in making bread," said Roger Harrison, 56, who bags buns at the Hostess plant in Lenexa, Kansas, and has been with the company for 35 years.

"They are not in the baking industry; they are just interested in the money," said Harrison, 56. "This company is so unstable that once they close, maybe someone can take over and buy it and give us more stability."

Union President Frank Hurt said management was trying to make union workers the scapegoats for a long-held plan by Wall Street investors to break up Hostess.

Hostess had given employees a deadline to return to work on Thursday, but the union held firm, saying it had already given far more in concessions than workers could bear and that it would not bend further.

The company was asking workers to agree to an 8 percent pay cut, a 20 percent increase in healthcare costs, closure of 10 to 12 plants and changes to pension and workday provisions.

Hostess managers have complained that terms of many of the 300 labor contracts that the company has in place have bogged down its ability to be both nimble and cost-competitive.

"The union has been the death of this company," said a human resources manager who recently left Hostess.

WIND-DOWN PLAN

The company, which filed for bankruptcy in January for the second time since 2004, filed its liquidation motion with U.S. Bankruptcy Judge Robert Drain in White Plains, New York, seeking permission to shut down and sell assets.

Hostess has 565 distribution centers and 570 bakery outlet stores, as well as the 33 bakeries. Besides Twinkies and Wonder Bread, its brands include Nature's Pride, Dolly Madison, Drake's, Butternut, Home Pride and Merita.

The company said in Friday's court filing that it would probably take about a year to wind down. It will need about 3,200 employees to start that process, but only about 200 after the first few months.

Hostess said it had been gauging acquisition interest for certain brands for months and in late September received "a number of potentially viable proposals" to purchase certain assets.

No investor was willing to acquire the entire company with the existing collective bargaining agreements in place, according to Hostess officials.

SunTrust Robinson Humphrey analyst William Chappell Jr. said Flowers Foods Inc could be among the potential buyers for some Hostess assets. And he said the company's liquidation was a "positive step" for the sector as it will shrink the number of major vendors.

"The consolidation should lead to a more normalized competitive environment," he said.

Hostess said its debtor-in-possession lenders had agreed to allow it to retain access to $75 million to fund the wind-down process.

The company has canceled all orders with its suppliers and said any product in transit would be returned to the shipper.

In its January bankruptcy filing, Hostess listed assets of $981.6 million. In a February filing, it assessed the value of its patents, copyrights and other intellectual property at some $134.6 million, although it did not break down the value by brands.

The company's last operating report, filed with the bankruptcy court in late October, listed a net loss of $15.1 million for the four weeks that ended in late September, mostly due to restructuring charges and other expenses.

http://news.yahoo.co...Y3Rpb25z;_ylv=3

[Drew Dowdell]

I blame Little Debbie.... she's a ho-ho.

[ocnblu]

I love those miniature chocolate donuts. And Ho-Hos. And those orange flavored, creme filled cupcakes.

I blame the union after reading a couple of articles. Not sure if that's enough information to have an informed opinion, but that's my story and I'm stickin' to it.

[Drew Dowdell]

I love those miniature chocolate donuts. And Ho-Hos. And those orange flavored, creme filled cupcakes.

I blame the union after reading a couple of articles. Not sure if that's enough information to have an informed opinion, but that's my story and I'm stickin' to it.

I can't blame the Union for being upset when asked to take an 8% cut after already taking a 10% cut, losing benefits, and having the pensions "restructured"..... just after the executives got 80% raises.

[A Horse With No Name]

Good riddance to the company, most of what they made was garbage, and they deserve pretty much to go under.

Feel sorry for the people loosing ther jobs, though....

[Intrepidation]

I can't blame the Union for being upset when asked to take an 8% cut after already taking a 10% cut, losing benefits, and having the pensions "restructured"..... just after the executives got 80% raises.

That's what gets me, if they were really serious about restructuring, everyone would have taken cuts, not just the low paid workers who need money more than the CEOs.

[Drew Dowdell]

The Execs are working for $1 this year. But in 2011 they had their salaries nearly doubled after the BK paperwork was already filed.

[ocnblu]

I think another company will buy these brands and they will live on. Biggest shame is the little people who did the physical work.

[Camino LS6]

I won't miss them - always thought that their stuff was nasty.

We did almost lose Tastykake last year, that would have been a real loss.

[daves87rs]

I love those miniature chocolate donuts. And Ho-Hos. And those orange flavored, creme filled cupcakes.

I blame the union after reading a couple of articles. Not sure if that's enough information to have an informed opinion, but that's my story and I'm stickin' to it.

I can't blame the Union for being upset when asked to take an 8% cut after already taking a 10% cut, losing benefits, and having the pensions "restructured"..... just after the executives got 80% raises.

+1

[A Horse With No Name]

I won't miss them - always thought that their stuff was nasty.

We did almost lose Tastykake last year, that would have been a real loss.

Agree on the nasty stuff.,...

[ocnblu]

Well I've never really been into Twinks, but those little chocolate covered Donettes rock.

[Robert Hall]

I ate enough Hostess Fruit Pies as a kid to last a lifetime..haven't had anything from them in probably 15 years or more... used to like Twinkies and Ho-hos, though. These days, for snackage I go w/ an occasional candy bar or a 'healthy' Clif Bar (they don't taste like cardboard like other 'healthy' snaky bars).

[G. David Felt]

I won't miss them - always thought that their stuff was nasty.

We did almost lose Tastykake last year, that would have been a real loss.

No not really, both of these could have gone away and it would have helped the obesity to go down maybe.

Well I've never really been into Twinks, but those little chocolate covered Donettes rock.

You do realize you were eating 95% food grad wax with 2% chocolate and 3% other stuff.

Nasty no matter how you look at it.

[ocnblu]

I had a candle for lunch. YUM!

[G. David Felt]

I had a candle for lunch. YUM!

Did anyone light you on fire!

[ocnblu]

[G. David Felt]

That Cracks me up! Rock On !!!

[A Horse With No Name]

Rock on indeed, I love that song!

[OhioTom76]

I won't miss them at all. I haven't eaten any of their products since I was a kid. They are way too sweet and loaded with fat and grease. From what I've read, the greedy execs ran the business bankrupt while giving themselves raises. They have no business trying to blame it on their lower paid employees, it is due to their own greed.

[Drew Dowdell]

I'll admit... I did miss their little donuts