Twinkies might last in perpetuity in their plastic wrapping, or so people always joked through the years. On Friday, their continued existence didn’t seem so certain anymore.
Hostess Brands Inc., the bankrupt maker of Wonder bread and Twinkies, said Friday that it would fire more than 18,000 workers and liquidate after a nationwide strike by bakery workers crippled operations.
“Companies in bankruptcy don’t have any margin for error,” Chief Executive Officer Gregory F. Rayburn said Friday in an interview with Betty Liu on “In the Loop” on Bloomberg Television. “We just didn’t have enough workers crossing the picket line.”
There still are rays of hope, however, for Twinkie fans.
As part of the liquidation process, Hostess is also moving to sell off its iconic portfolio of treats, and there still is a chance that the unions and Hostess could strike a deal before the liquidation is approved.
If liquidation proceeds, brands such as those up for sale by Hostess often find a second home after bankruptcy with a new owner.
The New York Times reported that in 2009, Gordon Bros. Group and Hilco Consumer Capital investors bought the assets of Polaroid, which pioneered instant photography. Last year, Polaroid struck a partnership with Lady Gaga, in an effort to revitalize the brand. Hilco also owns Linens ’N Things, the home goods retailer that has been reinvented online. Late Friday, Bloomberg News reported that Pabst Brewing Co. owner C. Dean Metropoulos & Co. is considering an offer for Hostess.
While the financial drama unfolded, many Hostess fans were taking to social media Friday to blame union demands for the demise of the snack food company.
Teamsters General Secretary-Treasurer Ken Hall had this response to union critics Friday: “Hostess’ problems go back almost a decade. The company has clearly been mismanaged for quite some time. However, the workers should not suffer because of poor management, and therefore, the Teamsters Union tried everything in its power during the company’s most recent financial difficulties to shape an outcome that would put Hostess on strong footing to be viable and preserve jobs.”
Hall continued: “Unfortunately, the company’s operating and financial problems were so severe that it required steep concessions from a variety of stakeholders, but not all stakeholders were willing to be constructive.”
Hostess CEO Rayburn said that there was no buyer waiting in the wings to rescue the company. But without giving details, he said that there has been interest in some of its 30 brands, which include Dolly Madison and Nature’s Pride snacks. Experts agreed that it was likely the biggest brands would survive.
Hostess, based in Irving, Texas, filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than three years. Unlike many of its competitors, Hostess had been saddled with high pension, wage and medical costs related to its unionized work force. The company also faced intensifying competition from larger companies such as Mondelez International, the former snack unit of Kraft Foods that makes Oreos, Chips Ahoy and Nabisco.
The shuttering of Hostess means the loss of about 18,500 jobs. Hostess said employees at its 33 factories were sent home and operations suspended Friday. Its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.The New York Times, Bloomberg News and The Associated Press contributed to this report.