NEW YORK, New York — The future of Twinkies is virtually assured.
Hostess Brands Inc. got final approval for its wind-down plans in bankruptcy court Thursday, setting the stage for its iconic snack cakes to find a second life with new owners — even as 18,000 jobs will be wiped out.
The company said in court that it’s in talks with 110 potential buyers for its brands, which include CupCakes, Ding Dongs and Ho Hos. The suitors include at least five national retailers such as supermarkets, a financial adviser for Hostess said.
“Not only are these buyers serious, but they are expecting to spend substantial sums,” said Joshua Scherer of Perella Weinberg Partners, noting that six of them had hired investment banks to help in the process.
The update on the sale process came as Hostess also received approval to give its top executives bonuses totaling up to $1.8 million for meeting certain budget goals during the liquidation. The company says the incentive pay is needed to retain the 19 corporate officers and “high-level managers” for the wind-down process, which could take about a year.
The request for executive bonuses prompted U.S. Rep. Chellie Pingree, D-Maine, to slam the company, claiming the request is “another slap in the face” to its employees now out of work.
“They should be ashamed to ask for bonuses for executives who just drove a company out of business,” Pingree said in a statement. “And the idea that they have to be paid extra just to stay on the job while 500 people in Maine and 18,000 people around the country don’t even have a regular paycheck because of poor management practices is outrageous.”
Two of the executives would be eligible for additional rewards depending on how efficiently they carry out the liquidation. The compensation would be in addition to their regular pay.
The bonuses do not include pay for CEO Gregory Rayburn, who was brought on as a restructuring expert earlier this year. Rayburn is being paid $125,000 a month.
Hostess was given interim approval for its wind-down last week, which gave the company the legal protection to immediately fire 15,000 union workers. The company said the terminations were necessary to free up workers to apply for unemployment benefits. About 3,200 employees are being retained to help in winding down operations, including 237 employees at the corporate level.
The bakers union, Hostess’ second-largest union, has asked the judge to appoint an independent trustee to oversee the liquidation, saying that management “has been woefully unsuccessful in its reorganization attempts.”
Hostess had already said last week that it was getting a flood of interest from potential buyers for its brands, which also include Devil Dogs and Wonder Bread. The company has stressed it needs to move quickly to capitalize on the outpouring of nostalgia sparked by its liquidation.
“The longer these brands are off the shelves, the less they’re going to be valued,” Scherer said Thursday in U.S. Bankruptcy Court in the Southern District of New York in White Plains, N.Y.
Last week, Scherer had noted that it was a “once-in-a-lifetime opportunity” for buyers to snap up such well-known products without the debt and labor contracts that would come with the purchasing the entire company. Although Hostess sales have been declining over the years, they still clock in at between $2.3 billion and $2.4 billion a year.
Scherer also said a surprising number of potential buyers have expressed interest in most of its three dozen factories.
Pingree said she’s hopeful the Hostess plant in Biddeford will be bought and reopened as soon as possible with management that has actual experience in the baking industry, rather than on Wall Street, in place.
“That plant in Biddeford is one of the more modern and efficient facilities in the company,” Pingree said. “They have had an excellent workforce and I hope we see some new management in there soon so they can get back to work.”
The company’s demise came after years of management turmoil and turnover, with workers saying the company failed to invest in updating its products. In January, Hostess filed for its second Chapter 11 bankruptcy in less than a decade, citing steep costs associated with its unionized workforce.
Although Hostess was able to reach a new contract agreement with its largest union, the Teamsters, the bakers union rejected the terms and went on strike Nov. 9. Hostess announced its plans to liquidate a week later, saying the strike crippled its ability to maintain normal production.
In court Thursday, an attorney for Hostess noted that the company is no longer able to pay retiree benefits, which come to about $1.1 million a month. Hostess stopped contributing to its union pension plans more than a year ago.
Toward the end of the hearing, a man who said he had worked for Hostess for 34 years stood to give his objections to the wind-down plan, saying creditors shouldn’t be paid when the company hasn’t been making its contributions to workers’ pension funds.
“I have traveled pretty far to get here,” he said, noting that many of his co-workers didn’t know how to get to the hearing and speak for themselves. “I just wanted to be heard.”
The company says the incentive pay is needed to retain the 19 corporate officers and “high-level managers” for the wind-down process which entails selling a bridge in New York to every single one of us.
They have no shame.
It is odd that during good times and bad those who contribute the least (upper-management) to most institutions or enterprises always seem to profit the most.
Mitt Romney-style business all over again. All they care about are the numbers. Can’t speak for you, but I swear I’ll never eat a Chinese Cupcake!
Fire 15000 workers? How can they be fired? They quit!
I guess those Unions really showed them who was boss……….
I guess those bosses showed what great fiscal managers they were. No wonder our country is in the dire straits that it is with people like these in charge.
These “captains of industry” should be court-martialed, not rewarded. Restructuring experts? probably worked for Baines under you know who.
Gopher, although I agree with your sentiment this isn’t about Romney and Bain Capital. It was an entirely separate entity that uses the exact methods that Romney and Bain did to ruin and loot companies, but it is not them.
Agreed. I was just trying to point out the similar ruin and loot tactics.
Getting every last drop of blood from the iconic sweet treat. Disgusting greed. I’d love to see that motion “denied” and the bankruptcy court “claw back” the pay of the executives who drove Hostess into the ditch
Way at go union!….you gave the people you hate a raise while kicking the people that you are suppose to be fighting for in the teeth!….keep electing them democrats though….they support your efforts…they ahhh smaaaht!
Who’s making the dough now?
If they would have caved, they would have still extracted raises just like they did last time. Shared sacrifice in corporate speech means that the workers get less and the bosses get more. If you will notice, Hostess is saying that they can’t possibly pay their workers pension of 1.1 million a month on 2.4 billion in sales. That was their big debt they were worried about. Half of one percent of their sales. Real Men of Genius appear to be running that company, totally worth the massive raises they extracted (which oddly enough were worth more than the 1.1 million).
What is the compensation to for the leaders of the unions that helped to kill Hostess?
The Baker’s Union president makes $264,000. For every member that works out to be $2.64 thereabouts. How much was the CEO making for his 15k workers? $2.5 million before the bankruptcy? So for each worker he was extracting $167. But, yes it is entirely those greedy union bosses who have 6 times the responsibility and make 1/10th of the salary who are to blame.
Good for them. So they get an average of 94K for having to sell off and break up their company. They said thank you to the union too for getting them this bonus. Same as the other employees thanked the union for costing them their jobs.
Maybe Chellie could take some time away from her humble Christmas festivities (if she celebrates such an evil concept) and give $1.8 mil of Donalds money to the poor displaced quitters that voted to kill the company.
Or, she might take the organizational skills she acquired back on the organic salt water farm that she harps about, and help the workers to sell their company.
What a disgusting twit.
Listening to you liberal whiners is interesting Plz pass the popcorn. Truly though the only winners are the competitors. Id like to see someone buy the old Nissen bakery and bring back the old Canadian white bread. The garbage they tried to pass as Canadian white made me switch bakers anyway
What you liberal democrat union loving money haters cant seem to grasp is the fact that in order to excel a business to run profitably, it takes managers who have a certain amount of “exceptional intellectual ability”! THAT COSTS MONEY!
Any sixth grader can run the “twinkie machine” but they wont be able to take that product to maximize profits in order to keep that sixth grader running that “twinkie machine”! The deal is, if you want a job and your “intellectual ability” only allows you to run the “twinkie machine”, dont expect a million a year in pay & benefits…YOU AINT WORTH IT!
Keep following these unions…soon you all we be unemployed sitting in the free cheese line scratching your heads wondering what happened!
WAKE UP PEOPLE…YOU’RE GOING UNDER WITH DEMOCRATS AND UNIONS LEADING THE WAY!
Exceptional intellectual ability? lol. Is that what they call managerial incompetence these days? You should donate your brain to science. Private union membership is down to 7% in America, and yet, in your narrow little mind they are STILL responsible for all our economic problems. Who will you lay the blame on when the unions are completely wiped out? The wages have been falling in this country for 20 years now. In your opinion, how low should they be allowed to drop? Would a $1 an hour fit your sense of justice for the working men and women of America? Eliminate all social programs? Would that quell your rage? BTW, how much do you think you are worth?
Wow, they sure have you duped. Bought the whole package, huh?
Look at the results! 18000+ people unemployed and a company OUT OF BUSINESS because the union told them to strike instead of taking a pay cut! Yeah…I “understand” the whole package!
I’m not a Democrat, but your logic is flawed.
management that keeps cutting salaries and benefits to a point where it is no longer possible to accept any more cuts is not effective or skilled management.
When I worked in AMES stockroom (yeah that’s right I’m one of those worthless employees without the intellectual ability to siphon off millions in profits for my friends and I) it was obvious to me that the company was plunging headlong into bankruptcy. I saw middle managers stealing stuff, and I saw them making deals with truck-drivers to not unload all the goods due our store.
During the same time these same middle managers were cutting employee hours, demanding more from the intellectually bereft, and preparing themselves for the leap to Walmart / Target / Home Depot when the AMES ship sank.
Maybe I was worth only $4.85 an hour (going minimum at the time) but I was there 15 minutes early everyday, I took no time off, and I did my work without stealing so much as a empty box.
It is obvious to even this low wage grunt that the administration at AMES, World Com, Enron, and Lehman Bros. were not worth their fantastic salaries, or their very generous severance packages.
BTW were you not the Bill Peters who (in this forum) declared that the soak-the-rick crowd were engaging in “class warfare?”
Your argument is intellectually dishonest, and I would guess totally self serving. Can’t say I’m surprised.
Here’s a thought,
Toss the golden-parachute “wonder-managers” out and promote new staff from within. Get some people who know every corner of that company and care whether it works and whether the people who are trying to make a living there (on both sides) are personally invested in making that business viable. Enough with the dis-invested -ruling-class management ideology. Companies are best run by those who take part in operations.
Hostess ought to give that 1.8 million to the teamsters and bakers unions to help their workforce that put them in this situation in the first place!!!