Hostess Brands files for bankruptcy again
Jan. 11, 2012
IRVING, TEXAS — Hostess Brands, Inc., the maker of Wonder Bread and Twinkies, once again has filed for reorganization under Chapter 11 bankruptcy protection. The company said its current cost structure is not competitive due to a legacy pension and medical benefit obligations and restrictive work rules. Those factors combined with the economic downturn and a more difficult competitive landscape led to the need for reorganization, the company said.
The proceedings affect the company’s five subsidiaries, and the company said with the filing and court approval, the company will receive a commitment for $75 million in debtor-in-possession financing from a group of existing first-lien lenders led by Silver Point Capital, L.P. The financing is expected to help Hostess continue normal business while undergoing restructuring. The company said it will continue operating its bakeries, outlet stores and distribution centers and delivering its products to customers.
In its Jan. 11 filing with the U.S. Bankruptcy Court for the Southern District of New York, Hostess said its biggest unsecured creditor is the Bakery & Confectionery Union & Industry International Fund, which it owes approximately $944.2 million. The company’s second largest unsecured creditor is Central States, Southeast and Southwest Areas Pension Plan, which Hostess owes about $11.8 million.
Also in the filing, Hostess listed its estimated assets at between $500 million and $1 billion, and its liabilities at more than $1 billion.
“Hostess has some of our industry’s most powerful and resilient brands,” said Brian Driscoll, president and chief executive officer. “With generations of loyal consumers, numerous iconic products and a talented and experienced workforce, Hostess Brands has tremendous inherent strengths to build upon.”
The company also has filed a motion to establish a timeline for motions under Sections 1113 and 1114 of the Bankruptcy Code to address labor agreements.
“Notwithstanding the procedures motion, we will do everything we can to reach a consensual agreement with our unions to modify our collective bargaining agreements,” Mr. Driscoll said. “We have engaged in good-faith bargaining with our labor partners for many months. We remain hopeful that we can reach an agreement that will allow us to amend our labor contracts so that we can emerge from Chapter 11 as a highly competitive company that provides secure jobs for our employees.”
Previously known as Interstate Bakeries Corp., Hostess filed for Chapter 11 bankruptcy protection in September 2004 before emerging in February 2009. At that time, the company announced it would operate as a private company, and in November 2009 I.B.C. changed its name to Hostess Brands, Inc., and moved its headquarters to Irving from Kansas City. The company said the previous efforts were insufficient due to a cost structure that did not leave the company positioned to respond to a worsening economy, increased competition and consolidation in the industry.
Hostess Brands employs about 19,000 and operates in 49 states. Annual sales are about $2 billion.