Could these Twinkies outlast their parent company? Apparently, Hostess set a 5pm EST Thursday deadline for their striking employees to return to their jobs — or the company would liquidate, resulting in a loss of 18,000 jobs. “We simply do not have the financial resources to survive an ongoing national strike,” the company’s CEO, Gregory F. Rayburn, said Wednesday. The company won’t make a final decision until Friday, but now seems like a good time to stock up on some HoHos. (photo by Christian Cable/Flickr)
» And they have company, too: San Bernardino, population 202,000, is not a small city. Nor is Stockton, population 291,000, which announced its intention to declare bankruptcy last month. Both fell on hard times after a boom-and-bust period. The much-smaller Mammoth Lakes also filed for bankruptcy protection recently, but unlike the recession-related reasons for the other two cities, their reason was lawsuit-related. (That city owes $43 million in a breach-of-contract lawsuit to a developer, which is far more than their yearly operating budget.) Anyone want to take bets on which California city falls prey to bankruptcy protection next, if any? (Edit: Spelling)
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» Quick thought on the matter: Anyone see shades of AT&T and Verizon in this whole mess, in that (like AA) both companies sold unlimited service for something — in this case, mobile data access — only to change their minds after they decided it was costing too much, in the process treating their customers like jerks? The lesson: Unlimited has limits, apparently.
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Michael Vick is nearing the end of bankruptcy, according to a new article over at Forbes. The former Atlanta Falcon has spent the last 3 years digging himself out of a $20 million hole created when he was indicted on federal charges related to dog-fighting. Advertisers soon pulled their endorsements, Vick was dropped by the Falcons, and found himself in the middle of a costly legal battle that left him penniless. Now, thanks to a $100 million dollar extension signed last year with the Philadelphia Eagles, Vick finds himself less than half a million dollars from being debt-free. (Photo by Talk Radio News Service) source
131 years in the making: As we mentioned a couple weeks ago, the former film titan, whose business put cameras in the hands of millions of people, now enters a new phase in its long history, bankruptcy proceedings. New York Governor Andrew Cuomo called it “difficult and disappointing news,” which is understandable; their company was headquartered in Rochester, NY. Since 2003, Kodak has laid off about 47,000 employees, and now in bankruptcy protection their already weak stock price has plummeted to 34 cents per share. If you want to get really depressed about this story, read Alexis Madrigal’s great piece on the company’s history. source
Kodak files for Chapter 11 bankruptcy | The Verge
Patent lawsuits won’t save Kodak from an overhaul, it seems: as predicted, the photography company just announced that it’s filed for bankruptcy. Kodak says it’s voluntarily filed for Chapter 11 reorganization in New York, in order to “bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property, fairly resolve legacy liabilities, and enable the Company to focus on its most valuable business lines.”
Having recently purchased a Kodak product and seeing how awful the user experience was, this is the opposite of surprising. Still sad though.
TRUTH
Glad to see Hostess can stay so optimistic considering the day’s news. The reason they’re going bankrupt probably involves too many snack parties.
Too many employees, too much debt: Hostess, the company that makes Twinkies, HoHos, Ding Dongs, Zingers and other amusingly-named foods (including Wonder bread), says that it has too many legacy payments. With 12 unions making up 83 percent of its 19,000 employees, the company says it ”is not competitive, primarily due to legacy pension and medical benefit obligations and restrictive work rules.” The company, which is still negotiating with its unions, will stay in business thanks to $75 million in financing from lenders. (photo by Like_the_Grand_Canyon on Flickr) source
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The end of an era: According to sources reported by The Wall Street Journal, the Eastman Kodak company sits on the verge of Chapter 11 bankruptcy, and is expected to file within the next couple weeks. Once a colossus in the world of film, advancements in digital technology inevitably hurt the company’s profits, straining an outdated business model; they’ve failed to turn a profit five of the last six years. Kodak employs about 19,000 people, and has heavy responsibilities to retirees — this is certainly not what the private sector job market needs right now. (Photo courtesy of alf sigaro) source
Which leads to the obvious question: Should we buy it from the people liquidating it? Does “Young Buck” sound like a great name for a news blog?
basicallyenhanced asks: As a son of an AA employee who went through the fear of mass layoffs during the post 9/11 airline bankruptcy days (He made it thankfully). Do you guys think AA'll be laying off any employees as per renegotiations with the unions? Or do you think it'll be purely restructuring.
» SFB says: To put it simply, layoffs are probably on the menu. From this CNNMoney article on the matter: “American pilots fly fewer hours than their counterparts at other carriers, and receive similar pay and benefits for less work time. And because the maximum number of hours an American pilot can work in a month equals the minimum at Southwest, American is required to hire more people to work in the cockpit for the same amount of flying.” Even though American pays less than most of the other airlines, the union-enforced disparity of hours is hitting the airline hard, costing them roughly $200 million each year. Benefits are also very costly for the airline. Ultimately, if the forthcoming labor talks go AA’s way, expect layoffs. Even if they don’t, expect service cuts that could lead to labor cuts anyway. — Ernie @ SFB
They were the only major airline to avoid bankruptcy in the past decade: In 2003, American Airlines parent AMR, which also operates the American Eagle airline, managed to stave off bankruptcy by scoring an agreement from its unions. The country’s third-largest airline, however, wasn’t able to get past it this time around. With the company’s stocks in freefall (down 45 percent since September) and a recent wave of pilot retirements playing harbinger, it seemed like signs were pointing towards bankruptcy. Here’s what their financials look like, according to their Chapter 11 filing, which they submitted to a New York court today:
» What this means for consumers: The company says it plans to honor its reservations, keep its normal schedules, continue its frequent-flyer program, maintain its Admirals Club lounges and pay employees their normal wages and health benefits. So outwardly, there should be no obvious signs that the company is trying to reorganize itself. (photo by Clara S. on Flickr)
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