Twinkies maker Hostess Inc. files for bankruptcy

AP File Photo

Hostess Brands Inc., the maker of Wonder Bread and Twinkies, re-filed for Chapter 11 bankruptcy protection Wednesday, just two years after emerging.

People familiar with the matter said the company is facing a cash crunch with more than $860 million in debt, high labor expenses and rising ingredient costs.

"Hostess's filing would mark what is known as a Chapter 22 proceeding in restructuring circles, since the company had already sought bankruptcy protection once before," the Wall Street Journal noted in a story Tuesday previewing the announcement.

When the company, then called Interstate Bakeries and based in Kansas City, Mo., filed for bankruptcy protection in 2004, it blamed low sales and high fixed costs. It emerged in February 2009.

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Hostess Brands employs about 19,000 workers and operates in 49 states. Annual sales are about $2 billion, according to the company's website. Hostess' private-equity owner, Ripplewood Holdings, put $40 million into Hostess last year, and hedge funds including Monarch Alternative Capital and Silver Point Capital loaned the company $20 million late in 2011.

Sales of Hostess Twinkies have declined at a time when the market for bakery snacks has been flat. Nearly 36 million packages of Twinkies were sold in the year ended Dec. 25. That's a drop of almost 2% from a year earlier, according to data from SymphonyIRI Group, a Chicago-based market-research firm that captures sales from major retail outlets, excluding big-box stores.

[DaveShoe]

I think we're making too much of the bankruptcy thing.

Hostess apparently has huge sums of money in the pension coffers, so money is not the issue. Raiding the pension should be good for a 900% short term Return-on-Investment (ROI) for the new owners, and once these folk get the money into their personal bank accounts it'll start "trickling down" to common Americans and help in the economic recovery. Besides, Hostess no longer represented "common America", as they were earning more, and had a health and pension plan that did NOT meet, modern American "fend for yourself" standards. Bankruptcy couldn't happen to Hostess too soon.

I'm sitting home right now, probably on food stamps or whatever else us modern Americans are supposed to be leeching off from the U.S. Government, just waiting to be saved by capitalist CEOs.

Extractionary capitalism is the new norm.

[foo8259]

Twinkle twinkle little bar, how I wonder what you are? And if perchance I was to eat, my teeth might rot my feet might stink? So in your wrapper you will stay to tempt me yet another day. Twinkle twinkle little bar ...

[tmn]

Mmm - I could go for a Twinkie or Ho-Ho right about now...

[MariePearle]

Note to government: This is an example of the free market working. Stop telling us what to eat and what to buy. We can decide for ourselves to eat healthy foods, thank you very much. If I happen to prefer lettuce and baby bok choy over broccoli and kale, what business is it of yours?

[redbeachvn]

Maybe they should ask for financial help from those pharmaceutical companies that make medication for type II diabetes.

[bobnjersey]

[Hostess' private-equity owner, Ripplewood Holdings, put $40 million into Hostess last year, and hedge funds including Monarch Alternative Capital and Silver Point Capital loaned the company $20 million late in 2011.]
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wow ... a whole $20 million into an entity that produces $2 billion in sales?

i'll bet the 'equity owners' have taken their handsome profits from this company already ... and are now scr3wing the debtors ... and positioning to renegotiate w/ the employees as part of their strategy that's not about 'running a business to produce a product' ... but rather 'an investment to produce a profit'.

[rwsmith29456]

People probably found out just how little real food is in a Twinkie.

[MariePearle]

Low-carb and raw food diets got popular. That's what happened.

[Godsmack4]

If you sell 36 million packages of Twinkies alone you should be able to turn a profit. High labor costs my butt. Poor management more like it.

[bradkt1]

A 2% decline in sales should not send your company down the drain. Any company can have off years. This sounds a lot more like being over-leveraged than it does high labor costs. I do not blame this on unions. I blame incompetent management.

[tsigili]

Their products have totally changed, over the years. They once had tasty products. Now they don't. That is the bottom line.