No More Twinkies?

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Posted On Wed, Nov 21st 2012 Posted by : Legaladvice.com Staff

     Mediation discussions broke down today between labor unions and management at Hostess Brands, Inc. The honorable Judge Robert Drain, heard the case in the U.S. Bankruptcy Court in the Southern District of New York in White Plains, N.Y and required mediation between the parties to determine whether  some resolution could be achieved. Judge Drain noted that “Many people, myself included, have serious questions as to the logic behind this strike,” and the hopes of mediation was an attempt to leave no stone unturned to achieve resolution. “Not to have gone through that step leaves a huge question mark in this case.” Drain further noted.

     Nevertheless, the mediation has proven unsuccessful and the labor unions would seemingly rather cut off their nose to spite their face as the expression goes. Hostess move last week to liquidate and sell off its assets in bankruptcy court will only mean that the labor union would rather have the employees lose their job than resolve the differences that erupted last week in a debilitating strike that led to Hostess Brands, inc seeking bankruptcy liquidation.

     The all important question as to whether or not your children and grandchildren will ever again taste the delicacy known as a "Twinkie" is probably in little doubt. Hostess has been in existence in American life and produced a bevy of confectionery treats such as Ding Dongs, Snow Balls, Ho Ho’s, CupCakes, Wonder Bread and a slew of other baked goods. Hostess Inc even had acquired the Drakes brands and were producing Yodels, Fruit Pies, and Funny Bones. All of these valuable trademarks and intellectual property will in all likelihood acquired by another company during the bankruptcy process.

     Irving, Texas-based Hostess, Inc. was saddled down by debt, management strife, rising labor costs and the changing tastes of America, decided last week that it could no longer could make it through a conventional Chapter 11 bankruptcy restructuring. In a stunning move - Hostess, Inc. asked the court for permission to sell assets and go out of business. Nevertheless, there are several interested parties that will likely acquire the intellectual property. Mexican bread company Grupo Bimbo; privately held McKee Foods, which makes Little Debbie snack cakes;Flower Foods, which owns Tastykake, and Canadian company Weston Foods are all seen as potential buyers for this division. It seems inevitable there will be a Chapter 7 Bankruptcy Liquidation.

     So, yes the Twinkie will probably survive as a sweet confectionary treat for your children and grandchildren to enjoy well into the future, but it seems puzzling as to why management and labor could not work out a deal beneficial to both partes. In the event that Grupo Bimbo acquires the iconic Hostess brands then it will be sadly ironic that a great American company has become internationalized on the world stage without borders.