Hostess, makers of Twinkies, files for bankruptcy again

Hostess Brands Inc., makers of Twinkies and Wonder Bread, is preparing to once again file for Chapter 11 bankruptcy protection, according to sources reporting to the Wall Street Journal.

This will be the second restructuring for Hostess Brands Inc., which emerged from bankruptcy in 2009.  

Sources told the Wall Street Journal that the rising price of flour and sugar has put the Irving, Texas-based company in a serious cash crunch with debts totaling close to $860 million.

When the company filed for Chapter 11 in 2004, they stated low sales and high fixed prices as their reason for seeking out a bankruptcy attorney. They emerged from Chapter 11 in 2009, but sales have not improved greatly and declined by 2 percent on 2011. 

Hostess Inc. has secured $75 million in debtor-in-possession funds to continue operations. Once they enter into bankruptcy they hope to renegotiate with labor unions and try to reduce debt. Hostess Brands Inc. sales total roughly $2 billion a year.

Today’s consumers are cutting down in their intake of carbohydrates and choosing whole grains. Hostess is feeling the effects of the dietary changes. Companies facing devastating debt have options, which can be detailed by a bankruptcy lawyer. Under certain filings a business can continue to operate while reducing their overall debt.

With the assistance of a bankruptcy attorney the ailing business can shed some of their debt and return to profitability.