edhopper (6,141 posts)
Info about the Hostess Brands (it's not the unions)
This isn't an old established company that has run into trouble after years because of the nasty unions.
It is an overleveraged venture capitol op. that has been in bankruptcy for most of it's existence.
From Wiki:
Bankruptcy (2004)
On September 22, 2004, Interstate Bakeries filed for Chapter 11 bankruptcy. The company also named a new chief executive, Tony Alvarez. Interstate Bakery's stock, which had been at one time $34/share, fell to $2.05/share as they declared bankruptcy. At the time it was the longest bankruptcy in U.S. history. During bankruptcy, Interstate fought a 2007 bid from Mexican baked goods giant Grupo Bimbo and Ron Burkle of the Yucaipa Companies.
With the leadership of Craig Jung, the company emerged from bankruptcy as a private company on February 3, 2009. The plan included a 50 percent equity stake by Ripplewood Holdings and lines/loans by General Electric Capital and GE Capital Markets, Silver Point Finance and Monarch Master Funding. Interstate's union workers made contract concessions in exchange for equity.
During the 2004–2009 bankruptcy period, Interstate closed nine of its 54 bakeries and more than 300 outlet stores. Interstate's work force declined from 32,000 to 22,000 employees. The company also dropped some regional brands and operating agreements, such as the agreement to produce Sunbeam Bread for the northeastern U.S. (now produced by LePage Bakeries of Auburn, Maine).
Hostess Brands, Inc. (2009)
Effective November 2, 2009, the company was renamed Hostess Brands, Inc. after the cake division that featured Twinkies and cupcakes. Hostess continues its bread lines, including Wonder Bread.
Bankruptcy and liquidation (2012)
By December 2011 it was reported that Hostess Brands was on the verge of filing for bankruptcy a second time after it suspended payments for union pensions and was struggling to remain current on its $700 million loan.
On January 10, 2012, Hostess Brands filed for Chapter 11 Bankruptcy for the second time. In a statement in its filing, the company said it "is not competitive, primarily due to legacy pension and medical benefit obligations and restrictive work rules." The company said it employs 19,000 people and carries more than $860 million in debt. The company said it would continue to operate with $75 million debtor-in-possession financing from Monarch Alternative Capital, Silver Point Capital and other investors.
Television talk show hostess Wendy Williams started a "Save The Twinkie" publicity campaign shortly after the bankruptcy filing. The campaign included promotions on The Wendy Williams Show.
In March 2012, Brian Driscoll resigned from his position as CEO. Gregory Rayburn, who had been hired and named Chief Restructuring Officer only nine days earlier, assumed the leadership position. Fortune reported that unions within the organization had been unhappy with Driscoll's proposed compensation package of $1.5 million, plus cash incentives and a $1.95 million "long term compensation" package. Additionally, the court had discovered that Hostess executives had received raises of up to 80% the year prior. In an effort to restore relations, Rayburn cut the salaries of the four top Hostess executives to $1, to be restored on January 1 the following year.
In July 2012, the New York Post reported that negotiations (lead by Silver Point Capital) with the Teamsters Union were close to a possible agreement that could allow Hostess Brands to cut employee pay and benefits, if the company maintained funding of existing pension plans. In May, all 19,000 workers had been warned (as required by the Worker Adjustment and Retraining Notification Act) that they could face a mass layoff. In an email to the Appeal-Democrat Hostess spokesman Erik Halvorson said that the May notices were to alert employees to possible sale or wind down of the company, but that "our goal is still to emerge from bankruptcy as a growing company with a strong future." These layoff notices listed the dates as July 7–21, but on July 5 another company spokesman told the Financial News & Daily Record that there were no immediate plans to start laying off Hostess employees.
In November 2012, Hostess employees nationwide went on strike. The Bakery, Confectionery, Tobacco Workers and Grain Millers' International Union, which represents 6,600 Hostess employees, took the strike action after the latest contract proposal from Hostess Brands was rejected by 92 percent of its members. In response, Hostess Brands issued the following statement: "A widespread strike will cause Hostess brands to liquidate if we are unable to produce or deliver products. If that's the case, the company will move promptly to lay off most of its 18,300-member workforce and focus on selling its assets to the highest bidders. We urge our employees to remain on the job to rebuild the company."
On November 16, 2012, Hostess announced that it was ceasing plant operations and laying off most of its 18,500 employees. It stated that it intended to sell off all of its assets, including the well known brand names, and liquidate. The CEO, Gregory F. Rayburn stated, "Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders."
http://www.democraticunderground.com/10021833868That's right folks, the unions are blameless it's those evil capitalists like Bain who destroyed the Twinkie.
GiaGiovanni (74 posts)
1. We need to Rec the hell out of this one
Venture/Vulture capitalists suck companies dry and the unions take the blame. This is an old and oft repeated story.
I bet none of you goons even knew what a venture capitalist company was until Mitt Romney came along and the dems started bashing Bain. Now all of a sudden they are the great evil in the world.
edhopper (6,141 posts)
9. My guess is
that the company was leveraged to much and with slowing sales, they could not make enough to service the debt they piled on.
So they want to screw the workers out of their benefits to keep as much as they can for themselves.
Yeah because they are in business to supply benefits, it's not like they need money to pay for them or anything either.
