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Hostess Brands Inc. has filed for bankruptcy and is currently seeking court approval to liquidate. It's officially over, fatties, say bye to your Twinkies and Ding Dongs.
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Okay, okay so maybe this isn't the end of Twinkies all together, but it surely is the end of the Hostess Brands.
After years of struggling to strike a balance between creditors, owners, and unions, Hostess Brands had to file for bankruptcy in January of 2012 for a second time. According to the company two large factors in the filing were: legacy pension and medical benefit obligations.
In a last effort to pull themselves out of bankruptcy Hostess suggested this plan:
A twenty-five percent (25%) ownership stake in the business, which would transform Hostess into one of the largest partially employee-owned firms on the planet.
A package of bonds in the company to go to the employees with a face value of $100,000,000 that would generate interest and be repaid in the future
A seat on the board of the directors, providing influence and power to shape the future of the enterprise
In exchange, the unions had to agree to:
Cut existing pay levels to fall in line with other major bakeries
Do like the other 90% of American manufacturing firms have and "freeze" pension plans, meaning that any new employees will have to use a 401(k) instead.
Pay more out of pocket for some other expenses such as insurance
(SOURCE:Reddit User KingofKona)
A majority of the employees agreed except for those in the Bakery, Confectionery, Tobacco Workers and Grain Millers' International Union (BCTGM). Tired of the threats, cuts and layoffs, BCTGM members throughout the nation went on strike. The members refused to back down from the picket lines, even when the company warned of an impending liquidation.
One week of striking was what it took to bring the 82-year-old brand down. Well one week and years of atrocious management. Hostess stayed true to its word and is now awaiting court approval to liquidate, this will leave nearly 18,500 employees out of a job.
Don't fret over your favorite treats just yet, there are many large and successful companies interested in buying pieces of hostess.