Twinkies Saved? Hostess, Union Agree to Mediation
Twinkies won't die that easily after all.
The bankruptcy judge hearing the case says that the parties haven't gone through the critical step of mediation and asked the lawyer for the bakery's union to ask his client, who wasn't present, if he would agree to participate.
The judge noted that the bakery union went on strike after rejecting the company's latest contract offer, even though it never filed an objection to it.
"Many people, myself included, have serious questions as to the logic behind this strike," said Judge Robert Drain, who heard the case in the U.S. Bankruptcy Court in the Southern District of New York in White Plains, N.Y. "Not to have gone through that step leaves a huge question mark in this case."
Hostess and the union are expected to begin the mediation process on Tuesday.
Irving, Texas-based Hostess, weighed down by debt, management turmoil, rising labor costs and the changing tastes of America, decided on Friday that it no longer could make it through a conventional Chapter 11 bankruptcy restructuring. Instead, it's asked the court for permission to sell assets and go out of business.
It's a far cry from when the maker of Twinkies, Ding Dongs and Ho Ho's filed for bankruptcy in January, its second Chapter 11 filing in less than a decade. The company had hoped to emerge with stronger financials. It brought on CEO Gregory Rayburn as a restructuring expert and was working to renegotiate its contract with labor unions.
But Rayburn wasn't able to reach a deal with the bakery union, which went on strike Nov. 9. Rayburn said that Hostess was already operating on razor thin margins and that the strike was the final blow.
The company's announcement on Friday that it would move to liquidate prompted people across the country to rush to stores and stock up on their favorite Hostess treats. Many businesses reported selling out of Twinkies within hours and the spongy yellow cakes turned up for sale online for hundreds of dollars.
Even if Hostess goes out of business, its popular brands will likely find a second life after being snapped up by buyers. The company says several potential buyers have expressed interest in the brands.
Although Hostess' sales have been declining in recent years, the company still does about $2.5 billion in business each year. Twinkies alone brought in $68 million so far this year.
Unless I was given wrong information. Last I check they tried to cut workers pay by like 25% and increased the CEO's pay by 300%.
I highly doubt there will be an agreement.
But as someone else said. Someone will buy them. If for nothing else than the name.
I'm not sure I get the interest in this story. From a political standpoint it's just another company trying to bust a union, or blaming the union for its troubles, depending upon your perspective. Ok great, we see that all the time. So is it that Hostess is that near and dear to us? Really? Nobody ate more snowballs and ding dongs than I did as a kid but really, I can't say I miss them that much and I'd like to think that we dont fed these to our kids like we used to.
I am not optimistic it will be saved but who knows a miracle could happen. It seems like a lost cause with the current health kick being endorsed. They just no longer fit into the bigger picture. Perhaps if they changed their products to more health concious but that would require a lot of money they just do not have.