Why is hostess going out of business

FP CryptoDecoded: Join us at our free crypto and blockchain events. Manage Print Subscription. Main Menu Search financialpost. This advertisement has not loaded yet, but your article continues below.

We apologize, but this video has failed to load. Try refreshing your browser, or tap here to see other videos from our team. Email Address There was an error, please provide a valid email address. Thanks for signing up! Alberta is on the verge of another boom — will it be more sustainable this time around? David Rosenberg: Our ranking finds Canada second frothiest housing market in the world. The average home price in Canada rose over 50 per cent last year.

At the time, many classic Hostess products such as Twinkies were so scarce that fans took to hoarding them. The spongy creamed-filled cake made its return that year. Another classic Hostess snack treat, Suzy-Qs, are also coming back. Despite being much smaller than it used to be, Hostess Brands' financial condition has improved. According to a presentation the company made on Tuesday to investors, payroll has shrunk from about 8, mostly union jobs to 1, now.

Do you work for Hostess? We want to hear from you. E-mail us and your story might be included in our coverage. Personal Finance. CNNMoney Sponsors. SmartAsset Paid Partner. These are your 3 financial advisors near you This site finds and compares 3 financial advisors in your area Check this off your list before retirement: talk to an advisor Answer these questions to find the right financial advisor for you Find CFPs in your area in 5 minutes.

NextAdvisor Paid Partner. Not unlike the situation automakers would find themselves in a few years later, the company was collapsing under the weight of flagging sales, overly generous union contracts replete with ridiculous work rules, and gobs of debt. But unlike the automakers, the five years Hostess spent trying to fix itself in Chapter 11 didn't fix its fundamental problems.

Instead, they set the stage for its eventual demise. But its labor contracts were still deeply flawed. Worse yet, the company left bankruptcy saddled with more debt than it went in with -- "an unusual circumstance that the company justified on expectations of 'growing' into its capital structure," as Kaplan put it. Suffice to say, Hostess didn't do much growing. It continued to lose hundreds of millions of dollars making and selling starchy snacks that much of the public had lost its taste for, while failing to launch any great new products.

The interest on its loans swelled the company's debt. By January , it was back in Chapter 11, trying to wrestle a new contract with more concessions from its unions. Hostess insisted that unless workers accepted further cuts, the company would have to shut its doors for good. That's the sort of threat that distressed companies often make in labor negotiations, and unions are inclined to consider it a bluff.

But after getting a look inside Hostess' books, the Teamsters concluded that the threat was serious.