Who, if anyone, is responsible for the demise of Hostess?

Question

Hostess Bakery Bankruptcy Case Hostess, an 82-year-old company that is one of the largest wholesale producers of bread and snack cakes that is headquartered in Irving, Texas, decided to seek liquidation under Chapter 7 bankruptcy. This would result in almost 18,500 employees losing their jobs. In November, 2012, the company stopped its operations at its 33 plants in the United States. The company blamed its large debt load and expensive labor costs and pension benefits for its dire situation. Members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), went on strike on November 9, 2012, and, that, the company claimed, was the final straw that crashed the company. The strike was precipitated by the company carrying out an 8% pay cut and a 20% increase in employee healthcare costs. Even though the union and workers had previously made concessions over the years, the company wanted more cuts. The unions claimed that the company was not serious about growing the company, but was more interested in making money for its owners, several private equity funds and hedge funds; the kind of owners sometimes derided as “vulture capitalists.”

Discussion Questions

1. Who, if anyone, is responsible for the demise of Hostess?

2. Should the government have come in and taken over the company?

3. Are so-called vulture capitalists a benefit or detriment to society?