COmpany fails due to no credit

[Specop 007]

Looks like heres an example of a company that (supposedly) couldnt make payroll due to the tightening credit.

This really sucks. Man I loved those cookies....

Article

Mother's Cookies Goes Out Of Business, Kills Off Circus Animals

If you're a fan of those pink and white frosted Circus Animal cookies from Mother's, either stock up or start priming your nostalgia, because this week the company closed its doors abruptly. They've cited the expected reasons?the rising cost of raw materials, and an inability to borrow in the frozen credit market.

Unfortunately, the private equity firm that owns the company (it's passed through at least four owners in the past 18 years) didn't give employees the federally required 60-day notice, citing "unforeseeable business circumstances." If they couldn't secure money to pay salaries, that may very well be the case.

If you've got $20 in your household goods budget and can't live with the idea of a circus animal-less world, you can make your own with this kid-friendly cookie cutter set. Or just buy some vanilla wafers and pretend you're eating single-celled organisms, you big baby.

 

[heyheybooboo]

It looks like they had a lot of other problems

Since 2000 they have been passed around more times than a doobie at a Phish concert.

Mother's Cookies, an Oakland institution for 92 years, has been shuttered, its owner seeking bankruptcy protection for the company.

The ending was abrupt: Workers for the company, which shifted its baking and distribution operations to plants in Ohio and Canada in 2006, told workers Friday that operations would cease and cookies would no longer be made as of Monday.

The company cited rising prices for raw materials and fuel, and on Monday filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court for the District of Delaware.

The company that made Mother's cookies at the end was the Archway & Mother's Cake and Cookie Co. of Battle Creek, Mich. It was owned by Catterton Partners, a private-equity firm in Greenwich, Conn., which in 2005 purchased it from an Italian firm, Parmalat Finanziaria, which was plagued by scandals at home.

In 2006, Mother's Cake & Cookie Co. was uprooted from its plant on 81st Avenue in Oakland and relocated. About 230 employees lost their jobs.

According to industry lore, the company was founded in 1914 by a newspaper vendor, N.M. Wheatley, as a one-person shop. It expanded and moved to the 81st Avenue location in 1949.

Mother's later had a series of corporate owners: a Belgian company, Artal B.V., bought it in 1991; it was owned by Specialty Foods Corp. of Illinois in the late 1990s; in 2000, Specialty sold Mother's and Archway Cookies to Parmalat, which in turn sold the combined business to Catterton for an undisclosed sum.

 

[CaptnKirk]

Evil bastards! They killed Kenny.

 

[dmcowen674]

Originally posted by: Specop 007
Looks like heres an example of a company that (supposedly) couldnt make payroll due to the tightening credit.

Topic Title: Company fails due to no credit

No company should be relying on credit to make payroll.

That is not a company.

 

[StageLeft]

Originally posted by: dmcowen674

Originally posted by: Specop 007
Looks like heres an example of a company that (supposedly) couldnt make payroll due to the tightening credit.

Topic Title: Company fails due to no credit

No company should be relying on credit to make payroll.

That is not a company.

And yet you've probably worked for dozens that operated like that.

 

[nageov3t]

Topic Summary: No more frosted animal cookies

noooo

seriously, I loved those cookies I'm going to have to go to the grocery store tomorrow and buy up whatever's there.

 

[TheSlamma]

Those things tasted like shit!

 

[dmcowen674]

Originally posted by: Skoorb

Originally posted by: dmcowen674

Originally posted by: Specop 007
Looks like heres an example of a company that (supposedly) couldnt make payroll due to the tightening credit.

Topic Title: Company fails due to no credit

No company should be relying on credit to make payroll.

That is not a company.

And yet you've probably worked for dozens that operated like that.

Actually I doubt it.

I've been in situations where the compnay could not make payroll and I was screwed.

It happened to me twice recently in fact, in 2006 and 2007.

Both times I had to find another job quick and both times I was eventually paid but 3 to 6 months later.

 

[DealMonkey]

No kidding. What sort of failure of a company relies on loans to make payroll? WTF?!? Is this the corporate equivalent of the single mom living paycheck-to-paycheck?

 

[mxyzptlk]

I hate the fuck out of those pink and white cookies but I love mothers iced oatmeal and iced lemonade varieties.. tell me, just the shitty cookies are no more right... right?

 

[jpeyton]

Now we're officially in a recession.

LAWL :laugh:

 

[LongTimePCUser]

Originally posted by: DealMonkey
No kidding. What sort of failure of a company relies on loans to make payroll? WTF?!? Is this the corporate equivalent of the single mom living paycheck-to-paycheck?

DealMonkey and other confused posters,

Many well run companies rely on working capital loans to meet payrolls.
Here is how business work: you buy raw materials, you pay rent, you pay employees and you sell products. Often you have to buy those materials to make products and pay for them before you get to sell the products. You have to pay for those materials. You also get to ship products before you get paid for them. Many companies sell on 30 days net. That means that you ship first and get paid later. That is Economics 101.

Since your revenue comes in at different times then your expenses, you have to take bank loans to smooth out the cash flow process.

This is just the way businesses work. If the cash flow from banks stop, then your creditors ( who sold you stuff) demand immediate payment. When you can't pay your rent on time or your employees or your bills, you have to close shop.

Here is another example. Many U.S. companies do most of their sales during the Christmas season. But, their expenses are year round. This works because they use bank loans or commercial paper, to raise the money to pay their bills while they wait for the December sales.

 

[Vic]

 

[UberNeuman]

Well, that's just the way the cookie crumbles....

 

[smashp]

Goodyear here in Ohio had to depend on credit and loans here a couple weeks ago to make payroll and keep the lights on.....


They had 350mil in cash in a MM fund that had seized and prevented any withdraws so they could make a timely sale of assets.

GY had no access to cash at all

 

[JS80]

Originally posted by: jpeyton
Now we're officially in a recession.

LAWL :laugh:

keep laughing

 

[LegendKiller]

Originally posted by: DealMonkey
No kidding. What sort of failure of a company relies on loans to make payroll? WTF?!? Is this the corporate equivalent of the single mom living paycheck-to-paycheck?

Companies where cash comes in every day but paychecks get sent out in one lump sum. In other words, a lot of companies.

 

[jpeyton]

Originally posted by: JS80

Originally posted by: jpeyton
Now we're officially in a recession.

LAWL :laugh:

keep laughing

All the way to the polls.

 

[Jaskalas]

In the next year we?ll have thousands of topics such as this, if we posted on each company that fails.

 

[MadRat]

I could not believe people don't understand how larger companies make payroll with loans. This is standard procedure at many places because their working capital is tied to investments or projects and cannot be immediately freed up. Your banks used to loan money like that if you could show the contracts you have signed by customers as proof that you can pay them back. This is how it works regardless if you are in a big or little business. And this credit crunch is really putting everyone's tit in a wringer right now.

The money is being loaned to banks by the fed only nobody is getting the money trickled down to them. Banks are covering their asses for some reason. I have a feeling there are a lot of banks that are insolvent right now and they are trying to hide their troubles until the feds show their cards.

 

[ViRGE]

Aww, not the cookies. I only half half a carton of Taffy cookies left.

 

[RichardE]

Originally posted by: DealMonkey
No kidding. What sort of failure of a company relies on loans to make payroll? WTF?!? Is this the corporate equivalent of the single mom living paycheck-to-paycheck?

Many companies use credit lines for payroll, as they ship out products which are paid in 30-60 days. Banks are pulling credit lines due to the credit crunch.

 

[DrPizza]

Oh nooooo! I hope that's not the brand we buy. We let little kids feed the unfrosted version as snacks to our goats. Time to go out and stock up on a couple cases.

 

[miketheidiot]

Originally posted by: dmcowen674

Originally posted by: Specop 007
Looks like heres an example of a company that (supposedly) couldnt make payroll due to the tightening credit.

Topic Title: Company fails due to no credit

No company should be relying on credit to make payroll.

That is not a company.

perhaps you don't understand the time value of money.

 

[brandonbull]

Looks like people need to revisit this SOP. People depend on credit a little too much for wealth generation.