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Hostess Brands Moves to Wind Down Operations, Sell Assets

Discussion in 'The OT' started by fluffybear, Nov 16, 2012.

  1. lwilli201

    lwilli201 Hall Of Fame

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  2. klang

    klang Hall Of Fame

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    I didn't say it was OK, but it seems to be the norm for a company going through this sort of thing.

    The baker's union turned down an 8% cut and instead received a 100% cut. Strange.
     
  3. fluffybear

    fluffybear Hall Of Fame DBSTalk Club

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    With Dolly Madison being a Hostess company, it's only a matter of time before they start to disappear as well.

    As I understood it, Hostess would continue to supply their customers until stock on hand was used up.
     
  4. SayWhat?

    SayWhat? Know Nothing

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    Soooo, 10, maybe 15 years?
     
  5. Drucifer

    Drucifer Well-Known Member

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    They could make a killing if they select to raise their prices. Not as high as what's on eBay, but they probably can pull off a doubling of their price.
     
  6. Stewart Vernon

    Stewart Vernon Roving Reporter Staff Member Super Moderator DBSTalk Club

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    So where do you draw the line?

    Say you go to work tomorrow and your boss says you have to take a 1% pay cut or the company will go under... and you agree.

    Then on Monday, your boss again says he needs to cut another 1% or else.

    How many days do you say "yes, please may I have another"?

    I grant you that employment is better than unemployment... but there are limits... or at least there should be.

    Also... it sure sounds like they were all too ready to liquidate, which tells me they were planning for it... which tells me that probably the request to cut pay was a stopgap to keep the doors open while they continued plans to liquidate anyway... so the strike just forced the company's hand openly sooner... in all likelihood, given what we know thus far, the company was probably 6 months or so away from this point anyway... so it would be better for those bakers to already be looking for their next job now anyway rather than be caught by surprise after they spend their money at Christmas.
     
  7. klang

    klang Hall Of Fame

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    Can't happen, my wife and I own the company. :)

    I don't think any of us really knows what devious plans management had in mind other then trying (poorly it seems) to make a buck for their owners/investors.

    It just seems to me for the 18000+ families involved, some employment is better then no employment.
     
  8. yosoyellobo

    yosoyellobo Icon

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    Will the workers get to keep any of their pension?
     
  9. klang

    klang Hall Of Fame

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    I think the government assumes some of the responsibilities.


    Reading the Hostess Brands Wiki it seems like this slow moving train wreck actually started back in 1975 when the original bakery company was acquired by an IT company.
     
  10. James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Club

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    And here is your answer ...
    Perhaps "bonus" is a bad word, but the additional compensation (severance pay?) is being paid as an encouragement to not walk out and make the situation worse.

    I know I won't get any compassion for the executives, but they are out of a job as well. Their responsibility remains to the OWNERS of Hostess Brands ... not employees or unions, but the owners of the brand.

    Perhaps if they did such a bad job they should be out immediately (if their contracts allow) and the company can manage the sell off without management - somehow. I'm not sure how well that would work. Or as I suggested earlier a more expensive "liquidation team" could be brought in.

    Just try to put aside all the emotional feelings for the 18,000 who are losing their jobs and the general hatred for managers (especially those getting bonuses). The cold hard fact is they work for the brand - and the owners of the brand will likely be happy with their work.
     
  11. lwilli201

    lwilli201 Hall Of Fame

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    I am sure the records from all the plants will have to be cataloged and properly packed and secured. They will probably have to do a complete inventory of every thing for the sale and tax purposes. All accounts receivable/payable will have to be identified and cataloged and presented to the Court which will determine who gets paid and how much. Corporate headquarters will still have to issue end of year employee tax W-2's. All computer data will have to be secured from all locations. People with institutional knowledge will be required to accomplish these tasks. They can not just lock the doors and walk away.
     
  12. Drucifer

    Drucifer Well-Known Member

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    If the pension funds haven't already been pilfered, it was probably invested in company stock.
     
  13. Stewart Vernon

    Stewart Vernon Roving Reporter Staff Member Super Moderator DBSTalk Club

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    But that gets us back to the reason for the baker's strike...

    The company wanted the bakers to accept an 8% pay cut and no pension... meanwhile the company wanted to give extra money to the executives.

    IF the company has a spending problem, it doesn't sound like it was being handled correctly. IF you decide to give your handful of executives HUGE raises to keep them, then argue your actual production line workers need to take pay cuts... it sounds like you have your priorities upside down!

    That's all I'm saying... there's no business scenario where you should be asking the front line workers to take a pay cut or else, while simultaneously rewarding executives with more money. That's a surefire way to drive a company into the ground... as happened here.

    You know what companies don't catch grief for giving their executives bonuses? Companies that are successful, growing, and are NOT asking their other employees to take pay cuts! Those companies can give their executives bonuses for a job well done.
     
  14. phrelin

    phrelin Hall Of Fame DBSTalk Club

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    In this case, as with so many, immediately prior to the decision to liquidate, the term "owners" gets a bit fuzzy. This wasn't some mom and pop bakery made good but still owned by mom and pop. It's corporate America at it's worst.
     
  15. scooper

    scooper Hall Of Fame

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    This post sums it up perfectly why I feel the way I do.
     
  16. klang

    klang Hall Of Fame

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    I don't think you are correct. The retention bonuses are because of the liquidation due to the strike by the bakers union. Those bonuses were not on the table prior to the strike.
     
  17. Stewart Vernon

    Stewart Vernon Roving Reporter Staff Member Super Moderator DBSTalk Club

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    That's not what I've been reading... What I have been reading is that after the first bankruptcy in 2004, concessions were asked for and given by the union workers... some plants were closed... and executives got raises.

    In January of this year, bankruptcy again... and a request for more concessions... and the creditors were asking back in April why executives got bonuses and raises instead of payouts on the debt owed.

    Then in the 2nd week of November the bakers' unions had enough and walked out, refusing more concessions... and a week later the owners said "we have to liquidate" and then tried to roll in yet another round of raises/bonuses before the liquidation hearing.

    So... each time the workers gave something up for the good of the company (supposedly), executives got raises... no debt was repaid... nothing improved... and the company went further in debt while the executives and investors made their coin.

    I've worked at a company like this... not one in liquidation or bankruptcy... but one that kept coming back to the workforce and saying "we need you to do the same work for less pay" and those who didn't agree were cut... those who stayed were asked "we need you to do more work for less pay" and those who didn't agree were cut... lather, rinse, repeat. Stockholders saw a quartlerly rise in profit due to the "savings" in reduced labor... but the workforce was increasingly overworked and underpaid.
     
  18. Davenlr

    Davenlr Geek til I die

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    The last two companies I worked for were exactly like that, and they are both non-existent now.
     
  19. runner861

    runner861 Icon

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    These executives don't deserve any bonuses. If they don't want to stay around, the court can simply appoint a receiver to liquidate the company. It is done all the time. There is nothing special about these guys, and they don't deserve any bonus.
     
  20. djlong

    djlong Hall Of Fame

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    This was the plan all along.

    TRIPLE your salary, if your the CEO, while getting concessions from everyone else. Give the other executives raises that are 50-100%. (When did you last get a raise like that)

    The MINUTE one union goes out on strike, announce a liquidation. Boeing can last MONTHS while it's workers were on strike. Hostess can't last a week?

    Promise the workers plant modernization and ignore the promise.

    Hike the hedge fund fees while stopping payment to the pension plan - TO THE TUNE OF $160M.

    Hike the debt to pay for the executive compensation.

    Liquidate the debt and collect your money AT TAXPAYER'S EXPENSE.

    How is it the taxpayers?

    - the government comes in to help out with the pension plan.
    - the bond holders will be declaring HUGE losses, which will cut their taxes.
    - the workers stop paying income and social security taxes.
    - unemplyoment receipts go down and expenditures go up.

    WHILE THE EXECUTIVES WALK AWAY WITH MILLIONS - and before you think the taxes on them will make up for it - remember - Mitt Romney's secretary paid a higher percentage in taxes than he did. There are tax havens available to the wealthy that are not available to the people who have to make a living on the salaries they make.

    I'm not a union guy and never have been. But this practice is *disgusting*. And the idea of any tax-paying American thinking that it's ok for the management team to do this is BLIND to the amount of money it's costing THEM.
     

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