Hostess Brands, the company better known as the maker of Butternut, Ding Dongs, Dolly Madison, Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride, and of course Wonder Bread and Twinkies, and which previously survived one multi-year Chapter 11 bankruptcy process, when it operated as Interstate Bakeries, has just made a splash at the NY Southern Bankruptcy court, for the last time, with a liquidation filing.
The reason: insurmountable (and unfundable) difference in the firm's collective bargaining agreements and pension obligations, which resulted in a crippling strike that basically shut down the company.
In other words, Twinkies may well survive the nuclear apocalypse, but there was one weakest link: the company making them, was unable to survive empowered labor unions who thought they had all the negotiating leverage... until the led their bankrupt employer right off liquidation cliff.
Hostess Brands is unprofitable under its current cost structure, much of which is determined by union wages and pension costs, the company said. Affected are 33 bakeries, more than 550 distribution operations and 570 stores in the U.S.
"Hostess Brands will move promptly to lay off most of its 18,500-member work force and focus on selling its assets to the highest bidders." It added it has access to $75-million in debtor-in-possession financing as it winds down its operations.
Will attention now turn to that another broke government entity, the Pension Benefit Guarantee Corp (PBGC), which will have to step in to resuscitate some 18,000 pension plans which suddenly vaporized after labor unions took their "negotiating" freedom a step too far?
============== A separate Canadian company owns the rights to the Hostess brand here in Canada, so we'll still have our twinkies and ding-dongs. You Americans, however, will now suffer from twinkie withdrawl.