Twinkie maker Hostess started contingency planning for liquidation months before strike

[Omaha Steve]

Source: Dallas News

By KAREN ROBINSON-JACOBS

Hostess Brands Inc. began contingency planning for a liquidation more than a year before irate bakers went on strike, court records show.

The bankrupt Irving-based snack maker has consistently said that a strike by the bakers — members of its second-largest union — pushed it into liquidation mode. The bakers have countered that the company’s woes predate the strike.

Clearly, planning for a possible liquidation predates the strike and even predates union votes in the fall on the company’s last best and final offer.

A 32-page document filed last week in Hostess’ bankruptcy case shows that in July or August 2011 the company hired a consultant who estimated that the liquidation value of the company’s assets, on the high end, was about $522 million. The report is dated Aug. 30, 2012, and parts of it have been reported earlier.

FULL story at link.




Read more: http://www.dallasnews.com/business/headlines/20121230-twinkie-maker-hostess-started-contingency-planning-for-liquidation-months-before-strike.ece?action=reregister

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Fox News (propaganda) has been blaming the strike exclusively this entire time. Think they will correct the story?

[thelordofhell]

1. This was all set in motion 10 years ago

When vulture funds bought Hostess and never did anything but pay consultant fees and shuffle in high priced CEO's and VP's by the barrel full. They instantly put the company into an 800 million dollar debt hole and never intended at all to come out of it in nothing but a bankruptcy liquidation.

[PatrynXX]

3. Sounds like Bain Capitol.

now we know why Bain is not the right way to go. I had blamed the Bakers Union but this put the ice on that. I stand corrected on stuff I didn't know. Teamsters though had no blame.

[Igel]

6. "Contingency."

It's different from just planning to liquidate. It implies that they wanted *not* to liquidate and there was a final straw that broke the camel's back.

You could try to argue that the contingency plans were what they were after all the time, but then you'd eventually need some proof for it.

For the bankruptcy to be approved, the judge is going to have to be convinced that, well, yeah, there was no other viable option. Every good CFO will make sure there are a variety of forecasts, some rosy and some dismal and will be asked to say how likely any one is. If the dismal forecast has a decent chance of happening, you want to make preliminary plans well in advance. If things go sour, you want zero time between recognizing it and moving to a leaner, meaner kind of business plan because every day you wait makes the plan that much leaner and meaner.Hard to see how that would apply to the bakers in this case, but I'm sure there'd be a way.

[Omaha Steve]

7. The workers were asked to give up over 30% of their compensation THIS TIME!

They had a give back four years ago that was supposed to be used for new machinery etc. Instead a stock bonus dividend was declared and pay raises for upper management. The company took $ the workers paid for their retirement plan for the last year and gave that to... wait for it...management.

Perhaps you think they should have taken minimum wage and be glad they had a job that would have made them dependent on public programs???

OS

[Sherman A1]

2. Hostess & Wonder have been in and out of bankruptcy

for years, come out of bankruptcy change the name and right back in to screw their workforce. That they would plan liquidation long ago is hardly a surprise. There never was a plan to save the company.

[JDPriestly]

4. Hostess baked a lot of junk food.

People are eating less and less junk food and more and more of the healthy alternatives.

The company was bound to go the way of the horse and buggy.

[Arctic Dave]

5. So you are telling me the management lied!?

Color me shocked.