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Twinkies Maker files for Chapter 11 Bankruptcy

Posted on Thursday, January 12th, 2012 in Uncategorized by Nick

Today is a sad day. Hostess Brands Inc, maker of Twinkies and Ding Dongs, is filing for Chapter 11 bankruptcy this week. The company, which is privately held, owes over $860 million in debt.

According to the WJS, Hostess brings in over $2.5 billion annually, but due to rising labor and ingredient costs there has been a cash shortfall. Over $50 million is owed to vendors alone. Hostess is accepted to renegotiate with the International Brotherhood of Teamsters and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union over contracts. Hostess employees are unionized and as a result has high pension and medical benefit costs to the company.

Sales of Twinkies have been down 2% this year. Americans are looking to healthy choices and Twinkies, well, aren’t the best food for you. I couldn’t tell you the last time I’ve eaten a Twinkie.

However Hostess did say that it will be able to maintain operations due to a $75 million financing commitment from a group of lenders led by Silver Point Capital LP.

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