Downfall of Hostess

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  • Topic: Trade union, Bankruptcy, Hostess
  • Pages : 4 (1754 words )
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  • Published : April 3, 2013
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RUNNING HEAD: DOWNFALL OF HOSTESS BRANDS

Abstract
The following text explores the company made famous by the “Twinkie,” Hostess Brands. During the last quarter of 2012, in the midst of an intense negotiation between the company’s constituents and sponsors to lower the cost of operations, one of the largest labor unions refused to renegotiate labor contracts, which caused Hostess Brands to declare bankruptcy. Along with the bankruptcy, the court ordered the winding down of all Hostess Brands operations and the liquidation of their assets.

Description
Hostess Brands, Inc. was established in 1930 as Interstate Bakeries Corporation, in Kansas City, Missouri. Once it surfaced from its bankruptcy in 2004, it relocated to Irving, Texas as Hostess Brands, Inc. Hostess had 18,500 employees and operated: 33 bakeries, 533 distribution centers, 5,500 delivery routes, 527 bakery outlet stores. (Hostess Brands, 2012). January 2012, Hostess Brands, Inc. filed for another bankruptcy protection under chapter 11, title 11 (Palank, 2012) due to a strike initiated by the Bakery, Confectionary, Tobacco, and Grain Millers International Union (BCTGM) concerning new contract offers (Fox News, 2012). Legal Information Institute states Chapter 11, title 11 serves as a request to reorganize the organization under bankruptcy laws for any corporation or small business, while allowing the debtor to still own the company (n.d.) Two months after Hostess filed for a second bankruptcy, a new CEO, Gregory Rayburn, was appointed. Rayburn enforced a pay cut of 8 percent for all Hostess workers; however his pay remained unaffected (Kavoussi, 2012). Secretary-treasurer for BCTGM Local 85, Marty Zimmerman told the Fox40 station, “…the mindset is we’re standing strong…they’ve taken our pensions away, we’ve have seven CEOs in the last 10 years; this company has been so mismanaged. Really, we’re at our wits end and enough is enough (Fox News, 2012).” BCTGM members complain that they had already...
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