No more Twinkies!

[FantWriter]

Hostess Brands had decided to call it quits! They've been in bankruptcy, and a major union went out on strike, so they're throwing in the towel and are going to sell off all its assets. Production is also stopping production of Ding Dongs, Ho Hos, and Wonder Bread.

No more Twinkies! The Mayans were right! It is the end of the world!

 

[Mustang73064]

I'm going to miss Twinkies and Ding-Dongs

 

[DaveP]

I think it's more that an old company refused to modernize and use the distribution methods available to them. Owning your own fleet of trucks and salesmen is the most expensive way to operate these days. The same thing is happening to Schwan foods. They used to stop by and sell from the truck on a regular basis. They had great products, but the grocery store is still the cheapest. They have closed their terminal in our town and changed to online orders shipped in dry ice packs.

Hostess could have used the bread companies to deliver their products to stores at a much lower cost, like most of the other snack food companies these days.

 

[FantWriter]

Hostess was a bread company -- Wonder Bread. The majority of their snacks were sold at points which also sold their bread or which were so high in volume that they warranted company delivery.

Their financial problems mostly stemmed from the fact that they couldn't be a price leader. Knock-off brands can have any commercial bakery with extra capacity make their goods, aren't locked into long-term, expensive union contracts, and don't suffer from the same hit to their brand identity if they have lapses in production or delivery because they only sell to wholesalers.

Also, insisting on using quality materials, having stringent quality controls, and properly rotating stock really hurt them. (No matter what you think of their ingredients, they always bought the best of those ingredients available, while some brands aren't as concerned about how much, if at all, their suppliers comply with FDA regs.)

 

[BWhare]

Not something I would normally weigh in on but I was reading some dross and was taken aback by the following excerpt:

In all pre-bankruptcy and post bankruptcy discussions, the company representative repeatedly stated that the financial investors of Hostess, the management and the union and non-union workers would have to make shared sacrifices (concessions) if Hostess were to have a chance of coming out of bankruptcy. However, such statements were disingenuous. The BCTGM was informed (via the Unsecured Creditor Committee) that the Hostess CEO was awarded a 300% raise (from approximately $750,000 to $2,550,000) prior to the January 11, 2012 bankruptcy filing. Additionally, at least nine additional top executives also received incredible raises ranging from 35% to 80%. For example, one such executive received a pay increase from $500,000 to $900,000. The chief negotiator for Hostess received a pay increase from $375,000 to $656,256.


taken from the link below:
http://webcache.googleusercontent.c...-by-hostess-brands/+&cd=1&hl=en&ct=clnk&gl=us

 

[hollyd]

No matter... The rich get richer and now there are a helluva lot of people out of work!

Proud mom of an American soldier

 

[FantWriter]

The BCTGM was informed (via the Unsecured Creditor Committee) that the Hostess CEO was awarded a 300% raise (from approximately $750,000 to $2,550,000) prior to the January 11, 2012 bankruptcy filing.

That's standard practice to ensure people get a fair share of their agreed salaries.

If a company has $1,000 in assets and owes Creditor 'A' $1,000, Creditor 'B' $980, and the CEO $20, then the $1,000 in assets is divided by the $2,000 total owed, and everyone gets 50% (Creditor 'A' gets $500, Creditor 'B' gets $490, and the CEO $10).

By raising, on paper, the amount the CEO is owed to $41, then it becomes $1,000 in assets divided by $2,021 owed, so everyone gets 49.5% (Creditor 'A' gets $495, Creditor 'B' gets $485, and the CEO gets the $20 he was really owed).

Bankruptcy courts have the right of rescission. If an exec was actually paid an inflated salary prior to filing, the court would negate that deal. The exec would have to pay it all back, and they could be facing criminal charges for attempting to defraud the creditors. Judges usually overlook last-minute raises or bonuses done on paper if it means that the exec receives their normal compensation (but no more than that) when the assets are distributed.

Whoever presented the facts you cited is either ignorant of the law or they're purposely trying to make the execs look bad.