82-year old baking company, Hostess Inc. files for Chapter 11 Bankruptcy!
Hostess, the makers of our sugary, childhood snacks like Twinkies, Ding Dongs and Suzy Q's has filed for Chapter 11 bankruptcy protection. Hostess Brand Inc. filed this Wednesday due to severe debt problems which the Wall Street Journal explains as "out-of-control labor structure."
This is the second time that Hostess has filed in the past few years and hopes that financial reorganization will help the major brand get back on its feet.
Chapter 11 bankruptcy for Hostess Brand Inc. means that the company will be operating normally but taking behind the scenes action to help restructure its business model. So how much debt is Hostess in exactly? Hostess owes a whopping $1.4 billion (that's a lot of Twinkies) as of December 10 and is working with its lenders, unions and private equity owner to come to a reasonable solution.
To make matters worse, The Wall Street journal reports that bakery snack sales have been flat which has affected Twinkie sales with a 2% decrease from last year's sales.
In 2009, similar action was taken to help Hostess gain financial control, but since then, the company has only experienced struggle.
Stay tuned as Hostess attempts to make some serious changes to its business. For now, Twinkies will be available in stores, but who knows what will be in store for Hostess' future.
A walk down Twinkie nostalgia lane...