Twinkie lovers, relax.
The tasty cream-filled golden spongecakes are likely to survive, even though their maker will be sold in bankruptcy court.
Hostess Brands Inc., baker of Wonder Bread as well as Twinkies, Ding Dongs and Ho Ho’s, will be in a New York bankruptcy courtroom today to start the process of selling itself.
The company, weighed down by debt, management turmoil, rising labor costs and the changing tastes of America, decided on Friday that it no longer could make it through a conventional Chapter 11 bankruptcy restructuring. Instead, it’s asking the court for permission to sell assets and go out of business.
But with high brand recognition and $2.5 billion in revenue per year, other companies are interested in bidding for at least pieces of Hostess. Twinkies alone have brought in $68 million in revenue so far this year, which would look good to another snack-maker.
“There’s a huge amount of goodwill with the commercial brand name,” said John Pottow, a University of Michigan Law School professor who specializes in bankruptcy. “It’s quite conceivable that they can sell the name and recipe for Twinkies to a company that wants to make them.”
Hostess has said it’s received inquiries about buying parts of the company. But spokesman Lance Ignon would not comment on analysts’ reports that Thomasville, Ga.-based Flowers Foods Inc. and private equity food investment firm Metropoulos & Co. are likely suitors. Metropoulos owns Pabst Brewing Co., while Flowers Foods makes Nature’s Own bread, Tastykake treats and other baked goods. Messages were left for spokesmen for both companies on Sunday.
“We think there’s a lot of value in the brands, and we’ll certainly be trying to maximize value, both of the brands and the physical assets,” Ignon said Sunday. He said it’s possible some of Hostess’ bakeries will never return to operation because the industry has too much bakery capacity.
Little will be decided at this afternoon’s hearing before Bankruptcy Judge Robert Drain, Pottow said. The judge eventually will appoint a company that specializes in liquidation to sell the assets, and the sale probably will take six months to a year to complete, Pottow said.
Irving, Texas-based Hostess filed for Chapter 11 bankruptcy protection in January for the second time in less than a decade. Its predecessor company, Interstate Bakeries, sought bankruptcy protection in 2004 and changed its name to Hostess after emerging in 2009.
The company said it was saddled with costs related to its unionized workforce. The company had been contributing $100 million a year in pension costs for workers; the new contract offer would’ve slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits.
Management missteps were another problem. Hostess came under fire this spring after it was revealed that nearly a dozen executives received pay hikes of up to 80 percent last year even as the company was struggling.
Then last week thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike after rejecting the company’s latest contract offer. The bakers union represents about 30 percent of the company’s workforce.
By that time, the company had reached a contract agreement with its largest union, the International Brotherhood of Teamsters, which last week urged the bakery union to hold a secret ballot on whether to continue striking. Although many bakery workers decided to cross picket lines this week, Hostess said it wasn’t enough to keep operations at normal levels.
The company filed a motion to liquidate Friday. The shuttering means the loss of about 18,500 jobs. Hostess said employees at its 33 factories were sent home and operations suspended. Its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.
News of the decision caused a run on Hostess snacks at many stores around the country, and the snacks started appearing on the Internet at inflated prices.
Twinkie lovers, relax.
- Headline News
Colorado deaths stoke worries about pot edibles
A college student eats more than the recommended dose of a marijuana-laced cookie and jumps to his death from a hotel balcony. A husband with no history of violence is accused of shooting his wife in the head, possibly after eating pot-infused candy.
Everest avalanche kills at least 12
An avalanche swept down a climbing route on Mount Everest early Friday, killing at least 12 Nepalese guides and leaving four missing in the deadliest disaster on the world’s highest peak. Several more were injured.
Diplomacy doesn’t move insurgents in Ukraine
Pro-Russian insurgents defiantly refused Friday to surrender their weapons or give up government buildings in eastern Ukraine, despite a diplomatic accord reached in Geneva and overtures from the government in Kiev.
Clinton to Obama: Many parallels
Thousands of pages of documents from President Bill Clinton’s White House affirm a longtime adage: The more things change, the more they stay the same.
As Clinton prepared for an August 1994 news conference in which he hoped to build public support for his struggling — and ultimately unsuccessful — health care overhaul, he told his advisers: “A lot of them want to know they can keep their own plan if they like it.”
Obama voices skepticism on Russia in Ukraine
President Barack Obama conveyed skepticism Thursday about Russian promises to de-escalate a volatile situation in Ukraine, and said the United State and its allies are ready to impose fresh sanctions if Moscow doesn’t make good on its commitments.
President defending health-care law good for some Democrats
President Barack Obama’s full-throated defense of his health-care overhaul seems perfectly timed for Democrats who want their party to embrace the law more enthusiastically.
At a White House news conference Thursday, Obama noted that health insurance enrollments under the new law are higher than expected, and costs are lower.
Deal reached on calming Ukraine tensions — for now
In a surprise accord, Ukraine and Russia agreed Thursday on tentative steps to halt violence and calm tensions along their shared border after more than a month of Cold War-style military posturing triggered by Moscow’s annexation of Crimea.
Boston Marathon organizers confident of safe race
The arrest of a man with a rice cooker in his backpack near the Boston Marathon finish line led police to step up patrols Wednesday, while organizers sought to assure the city and runners of a safe race next week.
The actions of the man, whose mother said he had a mental disorder, rattled nerves as Boston prepared for the annual race, but authorities said they did not consider it a security breach.
VIDEO: Toddler climbs into vending machine
A child is safe after climbing into and getting stuck inside a claw crane machine at a Lincoln, Neb., bowling alley Monday.
Solemn tributes mark Boston Marathon bombing anniversary
Survivors, first responders and relatives of those killed in the Boston Marathon bombing marked the anniversary Tuesday with tributes that combined sorrow over the loss of innocent victims with pride over the city’s resilience in the face of a terror attack.
- More Headline News Headlines
- Colorado deaths stoke worries about pot edibles