Who Killed Hostess?

As I’m sure you already know, Hostess Brands is going bankrupt and closing up shop. So who killed Hostess? The answer, as usual, is complex.


Hostess Brands, Inc., known as Interstate Bakeries during most of its existence since 1930, is a wholesale baker and distributor of bakery products in the United States.[3] It is the owner of the Hostess, Wonder Bread, Nature’s Pride, Dolly Madison, Butternut Breads, and Drake’s brands.

Wonder Bread was the first nationally sold brand of sliced bread. Ever heard that expression “The best thing since sliced bread?” That’s where it comes from.

For much of Hostess’ history they were buying up or merging with competitors, using economies of scale and brand recognition to dominate the market in the 1950’s and 1960’s. When I was a kid we used to take a sack lunch to school containing a sandwich (on Wonder Bread) and a Ding Dong along with some potato chips. I wasn’t alone – many other kids had Hostess products in their lunches.

But then things began to change. Hostess products were mass produced with bleached flour and refined sugar and contained lots of preservatives as well as artificial flavorings and colorings. Somewhere around the late Sixties the health food movement began to pick up steam and spread across the country.

Hostess products naturally became synonymous with “unhealthy” because they used pretty much every ingredient on the health food hit list except red meat. Then came the Atkins Diet which virtually prohibited anything with a Hostess label on it.

The dietary changes were probably most noticeable with kids – a big portion of the Hostess target demographic. Moms quit buying Hostess products for their kids as “healthy” snacks began to dominate the market.

On September 22, 2004, Interstate Bakeries filed for Chapter 11 bankruptcy. The company also named a new chief executive, Tony Alvarez. Interstate Bakery’s stock, which had been at one time $34/share, fell to $2.05/share as they declared bankruptcy. At the time it was the longest bankruptcy in U.S. history. During bankruptcy, Interstate fought a 2007 bid from Mexican baked goods giant Grupo Bimbo and Ron Burkle of the Yucaipa Companies.[15]

With the leadership of Craig Jung, the company emerged from bankruptcy as a private company on February 3, 2009.[16] The plan included a 50 percent equity stake by Ripplewood Holdings and lines/loans by General Electric Capital and GE Capital Markets, Silver Point Finance and Monarch Master Funding. Interstate’s union workers made contract concessions in exchange for equity.[17]

During the 2004–2009 bankruptcy period, Interstate closed nine of its 54 bakeries and more than 300 outlet stores. Interstate’s work force declined from 32,000 to 22,000 employees. The company also dropped some regional brands and operating agreements, such as the agreement to produce Sunbeam Bread for the northeastern U.S. (now produced by LePage Bakeries of Auburn, Maine).


Effective November 2, 2009, the company was renamed Hostess Brands, Inc. after the cake division that featured Twinkies and cupcakes. Hostess continues its bread lines, including Wonder Bread.[18]

So, Hostess Brands emerges from bankruptcy in the middle of the Great Recession. Three years later, management is pulling the plug. So who is to blame?

You can point to the the Bakery, Confectionery, Tobacco Workers and Grain Millers’ International Union, which represents 6,600 Hostess employees. They rejected the latest contract proposal from Hostess because it required significant concessions.

You can point to Hostess’ management. They made the decisions that put Hostess in its current predicament. Or you can blame the American buying public, because we quit buying Hostess products the way we used to do.

The truth is businesses are like living organisms in many ways. They are created, they grow, they get old, and they die. Their lifespans vary. Sometimes they stay alive by transitioning into completely new organisms.

Many people who have never run a business don’t realize how quickly a profit can turn into a loss. Businesses exist to make a profit. For some strange reason some people (pretty much all on the left) believe that business owners should not lay-off workers, cut wages and benefits and/or close a business until they have lost all their previous profits trying to stay afloat.

There is an urban legend that investors get wealthy by buying and then dismembering healthy companies and declaring bankruptcy. This is kinda like the “No Money Down” theory of real estate speculation. Yes, it can be done, but the circumstances where it works are very rare. If it was easy, the original owners would have done it themselves.

Labor costs are one factor affecting the health of a business. If your business is competing with other companies that have significantly lower labor costs (due to lower wages or automation) then you are at a disadvantage. The bigger the difference in labor costs, the bigger the disadvantage. That is a cold, hard fact of life.

What I find really interesting is that none of the stories about the Hostess bankruptcy mention how much the baker’s union members were making or would have made under the rejected contract. That’s a pretty important piece of data, don’t you think?


This entry was posted in Uncategorized. Bookmark the permalink.

135 Responses to Who Killed Hostess?

  1. myiq2xu says:

    There oughta be a law prohibiting Christmas movies and specials before Thanksgiving.

    The same goes for Christmas decorations and music.

    • leslie says:

      I know. I’ve been hearing Christmas music on one of the radio stations for at least a week, maybe 2. And it’s 24/7.
      I feel like not putting up a tree this year because of it. And then I see my grandbaby and think she’ll believe I am the grinch and I don’t want that.
      One of my neighbors has the house decorated to the roof top already. (It is pretty though)

    • t says:

      I heard a Christmas song on a TV commercial and I got tears in my eyes…and not of joy…and I’m not a cryer.

      Not a fan of the holiday season.

    • insanelysane says:

      Oh for cripes sakes…we are consumers and live to shop.
      That’s what makes our Capitalist world go round.

      I sell on eBay and it’s Christmas shopping time year round.
      I bet I can sell Bill Shatner’s old toupee with the right Christmas music.

  2. DM says:

    Management killed Hostess first by not keeping up with the change in consumers’ buying habits, but the final blow was the bakers’ labor union.

  3. angienc says:

    Can’t we just agree it’s Michelle Obama’s fault? /s

    I’ve read that the Teamster’s union agreed to the renegotiated contracts/cuts & they were 8% across the board salary cuts, but with all the b.s. going on with Trumpka actually pointing to Bain & Romney (who had nothing whatsoever to do with Hostess brands — the private equity firm that took the company out of it’s 2004 re-organization bankruptcy is headed by a Dem with ties to Dick Gephardt) plus the fact that most people writing/reporting on it the loudest don’t really seem to have the first clue about bankruptcy law, it’s difficult to trust any information.

    But yes, the market for the kinds of food Hostess produces has been shrinking over the last few decades & you don’t need to be a business whiz to figure that out –just look at the rise of places like Whole Foods & the push for “locally-grown, organic, unprocessed” foods.

    Sometimes a cigar is just a cigar.

    • DailyPUMA says:

      I tried to pitch Hostess on a crazy good marketing idea for one of their product lines, their Suzy Q’s. I simply asked for a deal memo in which they would set the terms and I would either agree, or not, If I agreed with the deal memo offer, I would offer the idea with no compensation and expect no compensation unless the idea actually increased sales without increasing costs.

      The executive I email communicated with was pretty hostile and was not even willing to come up any way for me to pitch my idea. This was around 6 to 10 months ago.

      When STRUGGLING corporations cannot figure out a way to offer a deal memo to someone who may have a great idea, then they deserve to go under.

    • elliesmom says:

      Parents used to buy Twinkies for school lunches because they were easy and cheap. Hostess could sell them cheap because most of the ingredients are artificial and the shelf life is long. While it’s easy to say Hostess should have changed with the times, the reality is most parents don’t pack lunches for their kids these days, and the snack food market is very different, “Healthy snacks” aren’t as inexpensive to make and have shorter shelf lives. Most snack foods are purchased by adults even if kids are eating them, and while we are all waxing nostalgic about eating Twinkies as a kid, very few of us think they’re good for us or our kids except as an occasional treat. Hostess is a bakery, not a granola manufacturer. Maybe they could have survived if they had expanded into the whole grain bread market in a bigger way, but even bread is taking a big hit these days. The low carbohydrate and the gluten-free crazes are doing a number on all of the bakeries.

      • myiq2xu says:

        I’m pretty sure that Hostess would have happily marketed new product lines, but that is easier said than done.

        • elliesmom says:

          That’s my point exactly. Just as buggy whip manufacturers would find it difficult to start making gas pedals, a bakery doesn’t easily become a yogurt company.

        • myiq2xu says:

          And even if they did become a yogurt company, would they still be unionized and use the same employees?

      • angienc says:

        I didn’t mean to imply that it was easy for Hostess to change with the times — I’m just saying that all the hand-wringing about “HOW COULD THIS HAPPEN!” and did management/private equity/unions kill Hostess etc. overlooks a big part of what happened:

        Times changed & Hostess didn’t. People not only started moving toward healthy snacks, all of a sudden scores started suffering from gluten allergies & lactose intolerance. Furthermore, we — as a society — have gone from just opting more often for “healthy” snacks but acting like you were a criminal if you don’t toe the “locally grown, organic, non-processed” line. Combine all that with a crappy economy where desserts & snacks are going to be the first thing left off the shopping list when you’re pinching pennies, and I don’t see what the big mystery here is.

  4. DM says:

    Hedge funds helped the company to come out of bankruptcy, and they were not willing to continue the losses to cover the operation costs of union labor that included a pension. The bakers’ union forced the owners to make a business decision, liquidate. It also happened with Borders. A business exists to make money for the owners. When its prospect is to lose more money, the doors close.

  5. DeniseVB says:

    More discontinued food products we probably didn’t realize were gone…..http://www.hometownfavorites.com/discontinued-foods/

  6. HELENK says:


    just wonderful. SEIU threatens to strike LA airport on one of the busiest travel days of the year.

  7. yttik says:

    Unions can make it very difficult to run a business, but so can all the state taxes and regulations. Many people in this country tend to view small businesses as if they’re all wealthy, greedy, and evil, so you have to regulate and tax the crap out of them or they’ll hire slave labor and destroy the environment. Small businesses are also kind of like Santa Claus, they supposedly have unlimited cash reserves which they just with hold from employees and the Gov because they’re selfish that way.

    Needless to say, when enough people in power subscribe to these ideas, small businesses are doomed.

    • angienc says:

      Many people in this country tend to view small businesses as if they’re all wealthy, greedy, and evil,

      Many people? I think we’ve got an accurate count on exactly how many: 63,452,985.

  8. driguana says:

    Anyone know the political affiliation of management? Surely this, too, will become poltical…somehow, either the Republicans or Bush were to blame.

    • angienc says:


      But don’t worry — Trumpka himself already pointed the finger at Romney & Bain (who have nothing to do with it). As I said in a previous thread, the last 4 years have been blame Bush, the next 4 seem to be shaping up into blame Romney/Bain.

  9. Simofish says:

    I LOVED Wonder Bread when I was a kid !!!! I’m buying a loaf tomorrow if there is any on the shelf.

  10. yttik says:

    I don’t know the salaries of everybody, but this NY Post article from July, has a delivery driver upset that he’s making 65,000 a year.


    • yttik says:

      A former Hostess outlet bakery clerk made 16.23 an hour. She said the dispute wasn’t really about wages, but rather billions in pensions and healthcare.

  11. myiq2xu says:

    Twitter is pretty much a wasteland right now for anybody who wants to stay out of the I/P conflict.

  12. swanspirit says:

    and while this is happening,with Hostess , at the same time a home based cottage food industry is growing .They have had to deal with state by state laws enacted regulating home based baking / cooking businesses . Some states do not permit home based cooking / baking businesses at all . some are highly regulated .
    But there is no national brand identification as we had with Hostess .


    Since 2010 HomeBasedBaking.com has been providing support to food entrepreneurs around the world. It is our mission to encourage and promote this overlooked industry. From our beginning we have always dreamed of a day where cottage food laws were active in all fifty states.

    In the meantime ,I just discovered Marie Callender’s lasagna , so no more Stouffers for me . I almost never buy pre-prepared meals , but Marie Callenders was really good 😉

  13. yttik says:

    A big part of Hostesses problems wasn’t really not keeping up with the times. I mean, as unhealthy as Twinkies were, they were still doing a couple billion a year in sales. The big problem seemed to be pensions, which is an issue for many unions around the country. Employees don’t want to contribute to their own pensions and companies that have been around for a while are now facing billions in pension liabilities. City Gov’s are having this same problem, the Education Dept, my own state. When you have hundreds of thousands of retired workers that you owe pensions to, it can add up to quite a sum.

  14. swanspirit says:

    A friend of mine had chickens in her very rural backyard , and thought she could sell extra eggs ,but ran into so many regulations , it was cost prohibitive . She can give them away , but can’t sell them .

    • yttik says:

      We have that problem with the cottage food industry laws in my state. Yes you can do it, but you have to get several permits first, 230 dollars for one, 70 for another, 125…and so it goes until it costs you a few thousand in various permits just to become legal. These sorts of fees, permits, taxes, regulations, have become a real burden on creative people attempting to make a living for themselves. I’d like to see a complete waiver of all this nonsense on people earning say…less than 20 grand a year.

      • myiq2xu says:

        Don’t forget the fact that many communities strictly regulate the type of home-businesses allowed. You can easily run afoul of zoning laws and get shut down that way.

      • angienc says:

        Food based businesses presents a unique problem– no one’s going to die from a bar of homemade soap,but if you’re selling chicken or homemade pies the state wants to make sure that you’re keeping the things refrigerated at the right temperature, the place that you are preparing things is clean, etc & that does entail people making periodic checks of your equipment, etc. Hence the fees to help cover those costs.
        Nonetheless, all the different fees & all the different departments you have to go through is a bunch of bullshit & could easily be streamlined if anyone in the government was motivated to do so (and they aren’t — no politician is going to get rid of government workers/departments/things that generate fees). That is what always happens when the government gets involved: you pay more to get less.

        • driguana says:

          Just before I retired last December as the Director of the Planning and Zoning Department (the Growth Management Department actually), the last thing that I did was to devise a new Home Based Business ordinance for the County. The need to do this was prompted in large part by the local Tea Party and their insistence that property rights should allow them to do whatever they wanted to do on their property. We held at least 20 meetings throughout the County to discuss this and the nature of zoning. Also at issue was the need to allow more people to do small businesses where they live because of the poor economy. The discussions with radical progressives and staunch Tea Party activists was amazing. The third important issue was less government regulation so that permitting of legitimate home businesses was easier, not harder. What we came up with was a three-tiered system that basically went from No Impact to your residence, to Some Impact, to Considerable Impact. The closer one got to something that was an actual full-bore commercial use, the more attention needed to be paid to the use by both the County and adjacent neighbors. The concept was widely praised and is now going through adoption. You’re right, angienc, government is not very efficient, nor effective for that matter, and what is ironic to me is that in a County as Democratic as Santa Fe County, residents should be pushing so strongly for less, government, less regulations, and less fees and taxes…..hmmmm, sounds familiar doesn’t it?

          for tht matter. It was always very ironic to me that

    • insanelysane says:

      Bartering is best.

  15. carol haka says:

    They could have reorganized and broken the multi-multi-multi union contracts they had. I heard this morning that bread cound not be in the same truck with some pastry etc. etc. so they had to spend assinine amounts of money on transportation and delivery. 👿

    • swanspirit says:

      Raccoons are very clean, they obviously needs something to wipe their feet on .
      Some years ago Raccoons took most of my fiber glass duct work under my home , I had to have my entire heating system replaced . Luckily , insurance covered it .Insurance didn’t cover the monster electric bill i had before we figured out what the problem was . I still call that year the year Raccoons attacked Ocean Pines

      • myiq2xu says:

        In my previous life as a pest control technician I had to deal with a few racoons. We limited ourselves to excluding them from the premises. If they are causing problems outside you gotta call animal control.

        I still remember the first time I shined my flashlight around an attic looking for evidence of rodents and saw a pair of glowing eyes staring back at me. At first I thought it was a giant rat.

        • swanspirit says:

          I had a possum on my back porch once .Now that looked like a giant rat . Still makes me shudder to remember .That damned thing didn’t play dead either .My son attacked it with a shovel and then it left .Ewww

          • myiq2xu says:

            I had one in my garage making a nest in the dryer vent. I discovered it one night when I turned on the dryer and it came running out. Scared the crap out of me. I attacked it with a shovel too, but I had better luck. It reared up and hissed at me so I flattened it. The second and third whacks were probably unnecessary.

            Then my wife (ex #1) came running out to see what the commotion was about and screamed. I guess I might of screamed a little too.

        • swanspirit says:

          They carry rabies too Raccoons do !

        • swanspirit says:

          Hey , I am sure those second and third whacks were entirely necessary ..The one my son went after did that too , reared up and hissed , what an UGLY sight . eww My son , being the trained killer he is ( Veteran ) just went after him more . If the damned thing hadn’t run he would have been happy to have flattened him . Those NASTY teeth on a possum ewww

    • yttik says:

      LOL! We’re having major problems with wildlife up here. One raccoon is cute, a dozen of them growling and hissing at you is scary. People move here and then start feeding them, so now we have hundreds. People also liked the deer, so they decided they needed “protecting.” Now we’re over run with deer. So the coyotes follow the deer which also brings down the cougars. Naturally people are now demanding the city gov do something about the animal invasion. All this cute and adorable wildlife is destroying gardens, dragging garbage all over the place, eating people’s dogs and cats, attacking visitors. It’s kind of funny, because now we have yuppies and hipsters arming themselves and arguing in favor of hunting.

    • angienc says:

      WTF? Those little SOB’s really will steal anything.

      I have a friend who had a huge, mean raccoon in her yard who would come up onto the porch to steal the dog food (when the dog was inside), so she had to start feeding the dog (a lab) inside the house because she didn’t want the raccoon around her yard. And for good reason, I might add as we have a mutual friend who’s cat got out accidentally (she didn’t realize it) and a raccoon in her back yard killed him. 😦 He was a sweet kitty.

    • soupcity says:

      Raccoons, ugh! A family of them moved into a sofit near our dining room and destroyed the whole thing. As a result my husband is right now fixing the inside damage to our dining room ceiling. In the summer he had to trap each one for release and was just about over the edge for a couple days there.

      It didn’t help me humming the “Mission Impossible” theme song each night as he was setting the trap with those little bastards hissing at him.

      Hopefully we will be done by thursday so we can actually eat in there.

  16. myiq2xu says:

    I am surprised that there have been no serious proposals for the government to step in and bail-out Hostess.

    If they did it would be a classic case of compounding the felony.

    The free market is efficient but it has no sympathy.

    • swanspirit says:

      Too good have to share that !

    • angienc says:

      I reluctantly watched Zombieland when it was on TV about a year ago (nothing else was on) & surprised myself at how much I liked it. It’s a really clever/fun movie.

      Same exact thing happened to me with School of Rock.

      • myiq2xu says:

        I just turned the TV on, scanned through my favorite channels, turned the TV off again.

        • angienc says:

          I’ve got on the Lifetime Movie Network — those salacious (and usually ‘based on a true story”) movies really suck you in.
          Now that I’m DONE with watching *any* news shows (alphabet network & cable) as well as all the alphabet networks for any purpose (I don’t have to reward them for lying to me to prop up Obama & with new media I don’t have to), LMN is going to be my “go to.”
          The one on right now is about a seemingly happy suburban mom with an online gambling addiction.

        • myiq2xu says:

          I basically watch old movies, reruns, Raider and Giants games and CMT/GAC music videos.

  17. myiq2xu says:

    If you want to see an alternative point of view, check out this from Americablog:

    Former Hostess Twinkies CEO tripled salary to $2.5m while preparing to file bankruptcy

    Except he didn’t actually get a raise, he just requested one. Now he’s not the CEO anymore.

    • myiq2xu says:

      Apparently Ghandi is a union member:

      David Story • 3 hours ago

      The costs are, one less facility that is screwing the American family. I would say the cost was well worth the gain. I have struck numerous times over the course of my lifetime and generally the strikes were for incoming workers pensions and insurance benefits. In other words, I was fighting so that our children may have a living wage and maybe a little dignity at retirement. The one’s that didn’t strike were more worried about themselves than our future generations. I won’t judge your husband because I don’t know your situation but I will say this. I am a proud union worker and will be till the day I die. I struck so people like your husband could have good jobs. Take a moment and think about that before you talk about price and consequences. I have went hungry so future generations could eat.

      • angienc says:

        Aw, all that effort striking & starving (when you could have been brushing up on grammar & syntax) for naught, because with $16 trillion in debt ($5 trillion of which came just from Obama’s first term) and estimates of him hitting at least $22 trillion by 2016, the future generations are 100 guaran-fucking-teed to starve. And retirement with dignity? Retirement isn’t even a possibility for those gawd damned Gen Y/millennials (who — btw — have ruined EVERYTHING for fucking EVERYBODY with their group think, stupidity, selfishness & entitlement) much less for future generations.

        Take a moment & think about that David the next time you blindly support a candidate like the SCoaMF just because he has a (D) after his name & demonize the guy who actually helped create jobs for 25 years of his adult life just because he has an (R) after his.

    • myiq2xu says:

      Urban Legend:

      RepubAnon • 10 hours ago

      So, they paid the “job creator” executives massive salaries to run the company into the ground, thus destroying jobs? Could it be that the real purpose was to bleed the company dry, then sell the corpse for parts – all while harming the unionized work force?

      Somehow I doubt that was the business plan.

      • myiq2xu says:

        This guy is really clueless:

        RepubAnon • 8 hours ago

        Creating new personal tax brackets at top 10%, top 1%, top 0.1% and top 0.01% salary levels (based on prior year’s cumulative tax returns for all US Citizens, scaling up to a max marginal rate of 50%) might have an effect as well. That, and changing long-term capital gains to holding an asset for 5 years minimum, might change the outlook.

        You’d want to put in some ability for folks such as professional athletes to put a larger-than-usual chunk of their income in a 401k-type account (they’ll be retiring sooner than the rest of us) – but the ever-lowering marginal tax rate for the upper income levels has a high correlation with the growth in outsized salaries.

        Uh, where do you think that 401K money goes? It gets invested in companies like Bain Capital! (if you are lucky) Someone else will be managing your investments, and getting paid to do it.

        Executive compensation gets structured in ways to get around taxes. Not to mention that the really rich (like Mitt Romney) don’t have “earned” income, they make their money off investments,

        • angienc says:

          Oh, no — the best part is his basically excusing the ridiculous salaries for professional athletes. Sure, dumbass, they’re going to “retire” sooner the rest of us — and they’re also going to make more in one season than most of us make in 10 years (if we’re lucky).

        • myiq2xu says:

          God forbid they have to take “real” jobs after they retire in their thirties.

        • angienc says:

          No kidding –and btwe when I wrote “more than most of us make in 10 years” — I was talking about the bench warmer pro-athletes. The superstar ones will make more in 1 season than most of us will make in a *lifetime.*

        • myiq2xu says:

          I remember when Jose Canseco signed a new contract that essentially paid him $10,000 for every at-bat. And that was in the late 80’s.

        • myiq2xu says:

          Current NFL minimum salaries range from $390K to $925K depending on how many years they have been in the league. That means if you make the team you earn AT LEAST that much.


        • angienc says:

          Current NFL minimum salaries range from $390K to $925K

          Exactly like I said –the bench warmer pro-athletes make more in 1 season than most of us make in 10 years. (Median household income in US is about $32,000 a year –x10 = $320,000).

      • angienc says:

        Jesus, Mary & Joseph — that canard has really become my pet peeve this election season. How the hell can anyone believe “running a company into the ground” is somehow “profitable” but that it is an INTENTIONAL BUSINESS PLAN.

        Fucking morons — no wonder they support Obama & think the lousy economy is *still* all Bush’s fault — they obviously are incapable of thought & reason.

        • myiq2xu says:

          They saw it in a movie so it must be true.

        • angienc says:

          It’s been a long time since I saw that Wall Street movie (it was when it came out in the 90s & once was enough) — but wasn’t that Gordon Gecko basically a corporate raider — that is a very different business from a private equity company. Corporate raiders buy distressed business for the purpose of breaking them up & selling the different parts (which, btw, is still not intentionally running them into bankruptcy & somehow making a profit off of it). Other than the initial purchase price of the company,corporate raiders do *not* generally invest money in the companies they buy trying to turn them around either.

        • myiq2xu says:

          “Corporate raiders” exist mostly in the minds of Hollywood screenwriters and gullible progressives.

          Don’t forget, Gekko went to prison at the end of that movie.

          • angienc says:

            Ha! True — I forgot it ended with him going to prison (really –I only saw it when it first came out).

            But I used the term “corporate raider” because (1) that how the vile progs describe Bain (along with calling Romney a “robber baron” FFS) and (2) to purposefully distinguish a practice that is *closer* to what the vile progs are describing from what private equity companies actually do. Businesses do exist the sole purpose of which is to buy distressed companies (many times ones that are already in bankruptcy) for the purposes of reselling them “for parts” (for lack of a better term). But there is no intention to invest money into those companies to try to turn them around. It’s like people who buy wrecked vessels for salvage — there’s no intention to try to repair the ship & sail it.

        • myiq2xu says:

          Generally speaking, the sum of a profitable company is worth more than it’s individual parts.

          • angienc says:

            Of course — that is why the vile progs are so ridiculous with their “purposefully running the company into the ground” bullshit. A thriving, successful company that turns a profit is what business people strive for — unlike the progs they aren’t keen on killing the goose that lays the golden eggs.
            However, once a company fails, you do need to sell off the parts to try to recover what you can of your investment and/or pay off creditors (hence Ch. 7 liquidation bankruptcy). Again, normal, *responsible* behavior. One analogy I can think of (this late) is once I had a car that the transmission got busted & fixing it would have cost me more than the car was worth — I didn’t just set the car on fire, I sold it for parts to get some money for the down payment on a new car. Not what I wanted– I would have rather driven that car for a few more years before having to buy another.
            These really aren’t difficult concepts to grasp for reasonable people who have a connection to the real world.

  18. Simofish says:

    My brother had a pet raccon – he used to rough house it. One day my mom was over at his place – the coon walked out and bit her in the leg.

    When she went to the doctor for antibiotics she told the doctor what happened. They sent the vet for the raccon. Killed it – sent its head off to the state vet to test for rabies. Boy, was my brother pissed.

    • myiq2xu says:

      Did it have rabies?

      • Simofish says:

        No, it did not.

      • SHV says:

        Skunks are the worst for rabies, then bats. A few weeks ago, I was sitting at a friend’s house having a few drinks and another friend called and said that he had been attacked by a bat while he was running. People had a good laugh until I said “are you fucking nuts?”….he needs to go to the ER and start the rabies shots. He did go and got treated. Rabies is essentially 100% fatal once symptoms appear.

  19. Simofish says:

    I had a pet raccoon and a pet fox as a kid. Both were wonderful ! Loved living on the farm. I also had a pet pig, lamb and about 30 farm cats

  20. myiq2xu says:

    Another canard: “Looting the pension funds.”

    There are two kinds of pensions – “defined contribution” and “defined benefit.”

    A defined contribution pension is like a 401k – money is paid in over time, accrues interest, and then when you retire you can start spending however much is in your fund. But it’s YOUR money from the instant it is paid in.

    A defined benefit pension is like what most government workers get – how much you receive when you retire is based on how many years you work and how much you were making when you retire.

    The problem with defined benefit pensions is figuring out how much to put in now to guarantee there will be enough money to pay the benefits later. If you don’t put enough in, or if you don’t get the rate of return you expected (or even worse your investments lose money) then when you retire the company (or the government) will be facing an “unfunded pension liability.” California public employee pensions are currently facing a $500 billion unfunded pension liability.

    But once the money is placed in the pension fund it cannot be “looted” or otherwise removed and spent.

  21. DM says:

    Okay, I have explain the “corporate raider” business. It all started in the 80s. A good business might be worth more for its pieces than if it is kept as is, losing money or barely making it because its overhead, its contractual obligations to labor or other entities, or/and outdated business practices. People like Bain Capital see the potential of businesses, such as Hostess and calculate that if they can change the operation and make it profitable or liquidate it, it is worth taking the risk and investing in it. So you can see where I’m going. The owners of Hostess tried to change the operation and contracts to make the business work and provide a certain return on the investment. When that didn’t work out, liquidating was a great way to go. As explained by a brand analyst at CNBC, the liquidation of Hostess will bring billions of dollars to the investors as the different pieces are sold, such as brands (Ho Hos, Twinkie, Sno Balls, etc), machinery, trucks, bakeries, etc., while getting rid of union labor, pension obligations and certain creditor obligations. Not a bad deal.

    It’s understandable why some would see the investors as raiders, while others, like me, see the whole practice as having some good. What we’ll see is one investor buy the rights (brand and recipe) of Wonder Bread, thereby creating jobs agains. Another or the same investor will buy the brand of Ho Hos, and create jobs. Many of the machinery will be back in operation when another bakery buys it. What the investors have done is get rid of the obligations that was making the business unprofitable. How long those products will continue to sell is anyone’s guess. It’s a dying business, and the price will reflect that Ho Hos and Twinkie do not sell the way they used to and will probably continue to see a drop in sales. Soon, people will see Ho Hos and Wonder Bread on the shelves of their stores again.

    • myiq2xu says:

      When a company files bankruptcy, the court takes charge of the liquidation. The owners and investors stand at the end of the line until all the creditors get paid first. It starts with secured creditors, then non-dischargeable debts, then dischargeable debts.

    • angienc says:

      Yeah that’s not what a “corporate raider” is though – nice try at the “explanation.”

      People don’t invest money in a business with the idea that they can put it into bankruptcy and that is “great” alternative to turning a profit– you almost NEVER get a profit on your investment in a bankruptcy & no intelligent person would invest with the idea that he or she would be able to so profit in case of bankruptcy — that is why investments in companies are categorized as RISKS and not guarantees.

      What you are describing is a way an investor may be able to RECOVER *some* of his/her investment, usually for pennies on the dollar (i.e., in most bankruptcies secured creditors are lucky to get 10 cents on the dollar and the investors themselves only get paid after ALL creditors — secured & unsecured — are paid 100% in full first and then only on a pro rata basis from the money left over after all debts are paid).

      • myiq2xu says:

        Not only that but bankruptcies can take years to complete. Meanwhile the company is making no income and stock value hits the floor.

        • angienc says:

          Yes, especially for a complex one (as Hostess is sure to be) with lots of assets to sell, creditors to pay, etc.

          OK, *now* I’m going to bed.

          Good night!

        • DM says:

          When a company files bankruptcy, the court takes charge of the liquidation.

          From your front page:

          During the 2004–2009 bankruptcy period

          The courts were not involved because Hostess was not going through bankruptcy. That was over and the new owners were in total control of the direction of the company. There was not need to go through another bankruptcy because the company was not insolvent. It’s simply not as profitable as the owners want it, and the owners prefer to get their money out through liquidation.

      • DM says:

        [investors] calculate that if they can change the operation and make it profitable

        I made it clear that their first attempt is to change the business and make it profitable. Hostess had already come out from bankruptcy. It was operating with new owners (hedge fund investors) that wanted to make a go of it. But they also had calculated that if the business could not be changed, such as asking the labor unions to agree to lower labor and changes to the pension. When that didn’t workout, the business was liquidated to get their money by selling the business piece by piece. Borders was also forced to liquidate by its owners. There were a few Border stores that were profitable, but the owners did not want to downsize. The investors decided they wanted whatever money they could get from selling the assets through liquidation.

        • DM says:

          Correction: But they also had calculated that if the business could not be changed, such as asking the labor unions to agree to lower labor and changes to the pension, selling the pieces would work well enough too.

        • angienc says:

          And you’re still wrong. I think I (and myiq) pretty much explained it well enough especially given how late it is & how I’m off to bed.

          I do bankruptcies all day long & I work for a US Bankruptcy Trustee.

          I will take a second to note that you’re writing now:

          “whatever money they could get from selling the assets”

          is a change in tune from your first post where you “explained it all” re: corporate raiders –and that still isn’t a profit on their investment (as you first contended). In fact, it is what I described, i.e, that is the normal course in a liquidation bankruptcy when a company fails (and, btw, even if you don’t go into a formal liquidation bankruptcy, when those assets are sold the companies creditors still have to be paid FIRST *before* the investors get dollar one).

          Thanks for playing.

        • DM says:

          Angienc, I’ll say it for the last time. Hostess was not going through a bankruptcy. It was not insolvent.

          • myiq2xu says:

            Hostess filed for reorganization under Chapter 11 of the Bankruptcy Code in 2004. That reorganization (not a bankruptcy although it is commonly called that) ended in 2009.

            Hostess again filed for Chapter 11 reorganization last March. On Friday they requested that it be changed to a Chapter 7 liquidation (a true bankruptcy).

  22. DM says:

    Hostess will go through liquidation and the bankruptcy court will take care of the creditors, but it wouldn’t have if the union had agreed to a different contract.

  23. DM says:

    From CNBC:

    When Hostess Brands announced that it would close up its operations, the forces most responsible for that decision were two hedge funds that control hundreds of millions of Hostess debt and which have finally decided they won’t squeeze any more filling into the Twinkie.

    The funds, Silver Point and Monarch, are what are known as distressed debt investors. They buy the debt of troubled companies—usually at steep discounts. Some consider them white knights who are willing to take make risky investments in companies on the verge of failure. Others say they are “vulture funds.”

    Only Silver Point and Monarch could have kept Hostess out of liquidation and kept the Twinkie bakery ovens firing. But they were, ultimately, unable to reach a deal with the unions that represents the workers who make and deliver products like Twinkies, Wonderbread and Ding Dongs. Without large union concessions—what some would say, total union capitulation—the hedge funds decided Hostess would have to die.
    After nearly five years in bankruptcy, Hostess emerged in 2009 under the control of a private equity firm called Ripplewood Holdings, which invested $130 million of new capital in the company. The keys to coming out of the bankruptcy the first time around were concessions by the two groups most responsible for Hostess falling back into bankruptcy just 3 years late: the unions and lenders that owned secured company debt nominally worth around $450 million.

    In the deal that allowed Hostess to come out of bankruptcy, the unions agreed to concessions that would save the company around $110 million a year in labor costs. The lenders, led by the hedge funds Silver Point and Monarch, agreed to provide a new secured loan of $360 million, forgive half the existing debt, and exchange the rest of that debt for a payment-in-kind loan.

  24. DM says:

    You are right myiq. There was a Chapter 11 filing this year. But from what I’ve read, the creditor that was weighing down Hostess was the unfunded pensions, about $2 billion.

    With liquidation, the pensions may get some of the money.

    • angienc says:

      Excuse me — were is your apology & retraction to me for staying with your idiotic assessment & writing walls of text asserting that Hostess was NOT in financial difficulty & saw liquidation as a way to “make money” for investors? Are you going to admit you were 100% wrong on that?

      Furthermore, regardless of the fact that Hostess filed for Ch. 11 (reorganization) bankruptcy earlier this year, you need to get it into your head that investors do not put money into a company with the PLAN to just liquidate it — if the company was more valuable broken up, investors would have bought it & sold it off WITHOUT investing more money in it (which is what I wrote upthread before you decided to “explain it all” with a post that is complete & utter horseshit). Bankruptcy is a LAST RESORT where you liquidate your assets to PAY CREDITORS.

      It seems to me that people like you have no idea what insolvent means — you somehow think that the fact that the company has assets & sells products that they are not insolvent. If your liabilities *exceed* your assets OR you can’t meet your obligations as they come due, you are insolvent. You can have $10 billion worth of assets but if you can’t pay your bills on time YOU ARE INSOLVENT.

    • angienc says:

      This statement of yours:

      Angienc, I’ll say it for the last time. Hostess was not going through a bankruptcy. It was not insolvent.

      This is what I want a retraction for & you admitting that you were 100% fucking wrong on this.

      If you don’t understand that a company does not have to actually *be* going through a formal bankruptcy proceeding to be insolvent you need to STFU “explaining” things.

      Seriously, do you even understand that bankruptcy is a legal procedure that helps to protect a debtor from creditors, to give the debtor a way to liquidate assets & pay creditors in an organized way without having to worry about creditors filing lawsuits to get paid but that the mere *fact* that a company has not formally filed a bankruptcy petition is *not* evidence that the company is solvent?

      Seriously, you need to stop thinking you can “explain” things you don’t know the BASICS about.

      • DM says:

        People don’t invest money in a business with the idea that they can put it into bankruptcy and that is “great” alternative to turning a profit– you almost NEVER get a profit on your investment in a bankruptcy & no intelligent person would invest with the idea that he or she would be able to so profit in case of bankruptcy — that is why investments in companies are categorized as RISKS and not guarantees.

        You are fucking right that Hostess had filed bankruptcy this year. And you are wrong that investors don’t buy with the calculation that if the business is not profitable the fund will still get its money back through liquidation. That’s a fact. I know that much because I worked in a company that was profitable ( I worked in the accounting reporting profits after taxes). It’s a long story, but like Hostess, it was a declining business and its profit was small and the prospect of being more profitable, like Hostess, was close to none. KKR came in and loaded the company with debt (leveraged buyout). Once the company was loaded with debt, one could say it was “insolvent”, but it became so by design. I left the company before it filed for bankruptcy. Years later it did come out of bankruptcy, but many of its pieces had been sold to pay off the debt. So I know what the fuck I’m talking about here. The unions are one of the big credit holders of Hostess, and the hedge fund wanted the unions to lower its pension debt with incentives. In other words, eat the debt for the benefit of the owners. That’s why I’m not sure the bakers were totally wrong. Like the CNBC article says, there are good reasons these investors are seen as vultures. They are. But vultures do a benefit of cleaning up the earth. The investors make businesses more profitable or finish them by destroying them piece by piece. It’s part of the equation from the beginning.

        • angienc says:

          You’re a fucking idiot.
          And “fact” doesn’t mean what you think it means.

        • angienc says:

          PS — BTW, I say you’re a fucking idiot because you are a fucking idiot who doesn’t know what she is talking about — you don’t even know what insolvency means & you can’t even tell that you are twisting a normal cost of doing business when a company fails (i.e., a bankruptcy) into some kind of “intentional business plan” and even though I’ve explained it very clearly, several times, you STILL think you know what you’re talking about.

  25. myiq2xu says:

    Bakers Union President Frank Hurt:

    “Our members decided they were not going to take any more abuse from a company they have given so much to for so many years. They decided that they were not going to agree to another round of outrageous wage and benefit cuts and give up their pension only to see yet another management team fail and Wall Street vulture capitalists and ‘restructuring specialists’ walk away with untold millions of dollars.

    “Throughout this long and difficult process, BCTGM members showed tremendous courage, solidarity and devotion to principle. They were well aware of the potential consequences of their actions but stood strong for dignity, justice and respect.”

    • DM says:

      I read (no link) that the unions gave huge concessions to help Hostess get out bankruptcy, and that the new hedge fund owners wanted more concessions. The hedge funds wanted the unions to write down the pension debt, and no promise for a bright future.

      The unions had good reasons not to trust the new owners, but it should not be a surprise that the hedge funds decided to liquidate.

  26. DM says:

    Twinkie Clone Recipe


    Non-stick spray
    4 egg whites
    One 16-ounce box golden pound cake mix
    2/3 cup water
    2 teaspoons very hot water
    1/4 teaspoon salt
    2 cups marshmallow creme (one 7-ounce jar)
    1/2 cup shortening
    1/3 cup powdered sugar
    1/2 teaspoon vanilla

    more instructions and video at link


  27. soupcity says:

    And another thing…. My daughter’s 8th grade class is planning a trip to D.C. in May. We were informed that we can no longer use bake sales (which by the way are very effective and easy for raising money) as fund raisers because of the new “school lunch nutrition” rules. It’s not bad enough 3/4 of the school lunches get tossed in the garbage cause they just won’t eat it. Nothing that is considered junk can be sold during school hours.

    It really burns my ass because I would bake every week if I had to so that her share of the cost is reduced. So now, we have to sell overpriced candles, wrapping paper and crappy knick knacks, that no one really wants. THREE times before this trip. It’s hard enough doing it once. When my son went 7 years ago, the class made over half of what they needed from these types of fund raisers.

    Sorry for the rant, this has really pissed me off.

Comments are closed.