Bankruptcy Alert: Hostess Makers of Twinkies and Wonder Bread
The maker of Twinkies and Wonder Bread, Hostess Brands, Inc., filed for bankruptcy under Chapter 11 on Wednesday. The corporation faulted its pension and medical benefits obligation, increased competition and tough economic conditions. This comes on the heels of a previous company, Interstate Bakeries, that emerged from bankruptcy proceedings just two years ago.
Hostess said that its previous attempts to produce incremental change were insufficient. The mandatory disclosure in the filing says that its largest creditor is the Bakery & Confectionary Union & Industry International Pension Fund, which it owes approximately $944.2 million. The second largest creditor is owed just $11.8 million.
Brian Driscoll, Hostess President and CEO, released a statement that the corporation is trying to reach consensus with its unions to modify its collective bargaining agreements. Hostess said that the current cost structure is not competitive mostly because of legacy pension and medical benefit obligations and restrictive work rules. These issues combined with more competition and the current economic conditions created a liquidity crisis that has forced the bankruptcy.
Hostess listed its estimated assets between $500 million and $1 billion and its estimated liabilities at more than $1 billion. Hostess has about 19,000 employees and operates in 49 states.