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Twinkies maker Hostess goes belly up

By Associated Press

POSTED:
LAST UPDATED: 04:28 a.m. HST, Jan 11, 2012



NEW YORK >> Hostess Brands Inc., the maker of Twinkies and Wonder Bread, is seeking bankruptcy protection, blaming its pension and medical benefits obligations, increased competition and tough economic conditions.

The filing today comes just two years after a predecessor company emerged from bankruptcy proceedings.

That company, called Interstate Bakeries and based in Kansas City, Mo., filed for bankruptcy protection in 2004. It emerged in February 2009.

But Hostess said Wednesday that its previous efforts to produce incremental change, including the prior bankruptcy case, were insufficient.

In its filing with the U.S. Bankruptcy Court for the Southern District of New York, Hostess disclosed that its biggest unsecured creditor is the Bakery & Confectionary Union & Industry International Pension Fund, which it owes approximately $944.2 million.

Its second-largest unsecured creditor, Central States, Southeast and Southwest Areas Pension Plan is owed far less, about $11.8 million.

Hostess President and CEO Brian Driscoll said in a statement that the company is working to reach a consensual agreement with its unions to modify its collective bargaining agreements. The company said that its current cost structure is not competitive mostly because of legacy pension and medical benefit obligations and restrictive work rules.

Hostess said those issues, coupled with more competition and the difficult economic conditions, created a worsening liquidity situation that drove its need to reorganize.

In its bankruptcy filing, Hostess also listed its estimated assets between $500 million and $1 billion and its estimated liabilities at more than $1 billion.

The privately held Irving, Texas-based company said that it will be able to maintain routine operations thanks to a $75 million financing commitment from a group of lenders led by Silver Point Capital LP.

Reports had surfaced earlier in the week that the bakery company was planning to make such a filing.

Hostess said that it will look to restructure into a "strong, competitive" company. It will continue to run bakeries, outlet stores and distribution centers and deliver its goods during the process.

Hostess has about 19,000 employees and operates in 49 states. Annual sales are about $2 billion, according to the company's website.







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manakuke wrote:
Sad sign of ‘hard economic times.’
on January 11,2012 | 04:00AM
1local wrote:
one way to eliminate pension and medical plans...
on January 11,2012 | 04:58AM
jusmetwocents wrote:
This is more like a text book example of how greedy union demands for unrealistic wages and benefits force major businesses to close their doors. Personally, I have not purchased any Hostess products for years and I wouldn't miss the company if it closed today. I hope all of their union employees enjoy all their spare time being unemployed WITHOUT retirement benefits!
on January 11,2012 | 07:22AM
al_kiqaeda wrote:
Too many unions have leaders that are bullies with no sense of business. All they understand is force...and that leads to taking as much as they can get and giving only what they are forced to. That said, there are a lot of CEO's that play by the same rules. Both will fail Risk taking businesspeople have to be compensated to reward all the rish they take and stressful long hours. Low risk hourly workers should be paid only what the market will bear BUT NOT beyond that. Unions go over the line and in turn hurt their own members. You don't like your wages go work somewhere else or upgrade yourself. Don't extort your employer.
on January 11,2012 | 08:12AM
Anonymous wrote:
Blame the pension plan and workers' rights, and not the product they're selling--Twinkies and Wonder Bread!? Think about it; when was the last time you bought one of those losers? To eat, not as a joke.
on January 11,2012 | 04:24AM
onevoice82 wrote:
Can't imagine my childhood without wonder bread and twinkies in my lunch bag every day at school.
on January 11,2012 | 04:25AM
cojef wrote:
Twinkies caused a councilman in Frisco to go bananas and killed the mayor. Pension and health insurance demands by the union killed the negotiations. Stalemate= bankruptcy= loss of job and everything that goes with it. Bankruptcy is the only remedy avaiable to thwart the union demands. Sad, another loss for workers, especially those with children.
on January 11,2012 | 12:42PM
UHFAN1984 wrote:
How's about the share holders taking less of a pay out and I wonder how much will be the CEO's severence package?
on January 11,2012 | 04:35AM
playsthenumbers wrote:
@UHFAN1984 - reduce the high pay of a few versus reduction of pay for the many? If all took a paycut (wages, pensions, & benefits), Hostess may be around for another ten years or so. As @Anonymous implied, Hostess really needs to beef up their product line to make it beyond ten years.
on January 11,2012 | 07:14AM
Manapua_Man wrote:
I would blame the product more than the workers. Nowadays, people are trying to eat healthier. Twinkies are not good for the waistline. They need to come out with a Twinkie that makes you healthy or something.
on January 11,2012 | 05:38AM
Classic_59Chevy wrote:
This comment has been deleted.
on January 11,2012 | 06:57AM
al_kiqaeda wrote:
AMEN.
on January 11,2012 | 08:02AM
mustangguru wrote:
This may be the start of the decline of junk foods. I agree that as more are seeking healthier diets, these kinds of snacks will fall by the wayside.
on January 11,2012 | 07:22AM
PaloloValley wrote:
Condolences to Hostess, Inc.
on January 11,2012 | 08:16AM
PaloloValley wrote:
Looks like someone has hacked into my SA username. What a loser.
on November 20,2012 | 05:51AM
butinski wrote:
Union demands have done it again and will result in more jobs lost. Can't blame overseas competition for this one. Bankruptcy proceedings will result in a stronger, leaner, more competitive company emerging.
on January 11,2012 | 09:03AM
nodaddynotthebelt wrote:
Again, union, probably has a hand in this whole sad situation. The pension and medical benefits were probably the result of union meddling and it will cause the collapse of the company. Instead of working within the budget of the company unions work against the company and this is the kind of thing that happens. Besides, Hostess products are so overly priced that most people cannot afford them. Again, because of the union's demands the company had to increase their prices and as a result people are less inclined to buy them. Which leads to less revenues which leads to bankruptcy which leads to loss of jobs. So again, thank you, unions.
on January 11,2012 | 09:43AM
PaloloValley wrote:
Exactly on the head of the nail. BTW... excellent username..... lol...memories.
on January 11,2012 | 10:03AM
PaloloValley wrote:
Where's the 'comment/blog' section for the other articles in today's Star-Advertiser? Posting the question here since it's probably quicker.
on January 11,2012 | 09:59AM
PaloloValley wrote:
* Testing * comment with s....a......or the whole name spelled out is sent for approval? Comments without them are posted directly?
on January 11,2012 | 10:00AM
PaloloValley wrote:
yep
on January 11,2012 | 10:00AM
Numilalocal wrote:
Ah, but perhaps the company will be like some of its products: left to sit on a shelf for years, twinkies are still edible. They'll probably come back in another (petrified and preservative-laden) form to kill more people with sugar and malnutrition.
on January 11,2012 | 10:18AM
WalkoffBalk wrote:
So, you need to eat a stalk of sugar cane to get you sugar fix with no twinkies or cup cakes.
on January 13,2012 | 10:16PM
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