Hostess Prepares To File For Chapter 11 Bankruptcy Protection

Gird your Twinkies, Hostess lovers: The maker of those frosting-filled yellow logs is preparing to file for Chapter 11 bankruptcy protection this week, says a new report. It’s the second time in recent years that it’s attempted to restructure in court.

The Wall Street Journal cites people familiar with the matter, saying the makers of Twinkies, Wonder Bread and those iconic chocolate Hostess cupcakes with the squiggle of white icing, are carrying more than $860 million in debt.

Rising prices for sugar, flour and other ingredients the company needs to bake up its various smushy offerings are partly to blame, as well as the high labor costs that come with employing around 19,000 people. Even $2.5 billion in sales hasn’t been enough to meet those rising costs.

They’re also in debt to the tune of about $50 million to vendors, which are now asking for Hostess to pay up because of the financial straits, one source told the WSJ. Since the company has filed for Chapter 11 before, in a restructuring move in 2004, those in the know are calling this newest filing a Chapter 22 proceeding.

Hostess has faced challenges luring customers in to buy their goods, as many Americans have left white bread behind for healthier whole grain options. Hostess’ version of a whole-grain loaf, Nature’s Pride, hasn’t done well against its rivals on the shelves.

Stockpile those Twinkies just in case. They’ll last forever anyway, right?

Twinkies Maker Preparing for Chapter 11 Filing [Wall Street Journal]

Comments

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  1. Costner says:

    With obesity becoming our nation’s pastime, I’m actually shocked that Hostess can’t survive. I would have expected business to be booming.

    I think their problem is a failure to innovate. Everyone knows the recipe to success is to make a larger version of an existing product and then pretend it is new, so what they need is XXL size twinkies or King size cupcakes. I’m thinking a twinkie the size of a loaf of bread should suffice…. that is a sure way to return to profitability.

    • [redacted] says:

      Plus, you know, bad food is bad food.

    • Daggertrout says:

      That’s a big Twinkie.

    • captadam says:

      We’re becoming obese on things that we think are “healthy.” Real cane sugar is a health food now, don’t you know?

    • Applekid ‚îÄ‚îÄ‚î¨ Ôªø„Éé( „Çú-„Çú„Éé) says:

      Why yes I would like to make sandwiches with twinkie bread.

    • mauispiderweb says:

      What is WRONG with all of you? Drake’s cakes are the BEST! Devil Dogs and Funny Bones! Though, I will admit to loving me some Tastykakes (Butterscotch Krimpets FTW!)and I’m very partial to Hostess Suzi-Q’s.

    • RiverStyX says:

      Kinda makes sense. Buying the product implies going to the store and purchasing it Most fat people are too lazy to even leave the car, so they use the drive-thru or get one of those motor scooters to do the walking for them.

      I got an idea to keep them afloat: Drive-thru twinkie hose! Drop your change into a bucket like at a toll booth, pull up to the hose and get sprayed in the mouth with twinkie-slurry. Its brilliant, lets do it.

  2. NashuaConsumerist says:

    Bad News for Tallahassee….

  3. tbax929 says:

    I was sad when I read about Tastykake being in trouble. I’ve always much preferred Tastykakes to Hostess, so this news doesn’t sadden me. If you tell me they’ll stop making Tastykakes, you might have to put me on suicide watch.

    • Mamudoon says:

      If anything happens to Tastykake, I will drown myself in a vat of Krimpet icing.

      Then again, that’s how I plan to die regardless of Tastykake’s financial standing.

    • larrymac thinks testing should have occurred says:

      Tastykake seems to be doing well since the Flowers buyout/partnership/whatev. They certainly increased their distribution quite a bit – I saw Tastykakes in Target in central Florida back in November. If I couldn’t get a chocolate Junior every once in awhile, life just wouldn’t be worth living.

      • tbax929 says:

        I pay a small fortune to have a ton of them shipped to me at Christmas each year. I usually have a house full of PA transplants (myself included), and they make great gifts.

        The only problem is their ingredients are so fresh that the shelf-life is short. So I always wait until the last possible minute to order them.

        My favorite are the chocolate eclairs, but I also love peanut butter kandykakes and butterscotch krimpets.

  4. clippy2.0 says:

    Wonderbread is the devils grain. Be gone wonderbread!

    • Sunrisecarole says:

      I won’t be able to make my Marland crab cakes without a couple of slices of Wonder Bread. It is the only glue that works to hold the cake together without a ton of filler. Three slices per pound of crabmeat; crust off. I buy one loaf a year, divide it into sandwich bags for the freezer, and used just for crabcakes.

  5. Don't Bother says:

    At leas my Swiss cake rolls will be safe : D

  6. pgr says:

    Crap products for dumb people – what would you expect!

    • MutantMonkey says:

      Elitist to make trollish comments on a public space?

    • maruawe says:

      With an IQ of 146 I don’t think your reply applies to me but I am not alone in liking Hostess products……. You must be a veggie

      • Coffee says:

        Oh come now…we needn’t be whipping those out in public and comparing sizes, need we? We can all see your IQ bulge from here, and frankly, it’s more than a little obscene.

      • pop top says:

        What the hell are you doing here with an IQ like that?! You need to go out and solve world hunger! Or invent cold fusion! Create an AIDS vaccine! MENSA would probably like to hear from you as well.

      • McRib wants to know if you've been saved by the Holy Clown says:

        My IQ is really fine
        when all the cats in KatzenStien
        hold it up neatly in a line

      • moonunitrappa says:

        “You must be a veggie”.

        I honor you with the badge of “Overuses Stereotypes”. Wear it proudly next to your “Holier than Thou” Patch.

        Not all veggie types eschew junk food. I for one appreciate a good Little Debbie cake now and again.

    • Harvey The Wonder Hamster says:

      The day I’m too smart to eat Twinkies is the day I get Moe to shove a crayon into my brain.

  7. LogNoggin says:

    NOOOOOOOOOOOOOOOOOOOOOO!

  8. Cat says:

    So, the Twinkies in my pantry might have a longer shelf life than Hostess?

  9. BumpinUgglas says:

    THE CURSE OF FRUIT PIE THE MAGICIAN.

  10. Mamudoon says:

    Does this mean that I have to start stockpiling my precious chocolate cupcakes with the squiggle on top? :(

  11. pop top says:

    As long as Little Debbie keeps on keeping on.

  12. PlumeNoir - Thank you? No problem! says:

    But how will Spider-man foil the robbery now???

    Wow. I think that just showed my age…

  13. AstroPig7 says:

    I imagined Cheech Marin saying he felt a great disturbance in the force, as if millions of snack cakes cried out and then were silenced.

    • Phil Villakeepinitrreal says:

      “I felt, like, a great disturbance in the weed, man. As if millions of smokers came down with the munchies, and Twinkies were all sold out…it was heavy…”

  14. bikeoid says:

    What? No more Ho Hos?

  15. maruawe says:

    Sorry to hear this now where will I get my donuts to eat while on the computer every morning
    Guess my freezer will be full of donuts in the near future

  16. TheMansfieldMauler says:

    Yeah because corn is now being burned as fuel due to government subsidies (even though it’s a pretty inefficient fuel), HCFS and all corn-related products have gone up, which in turn puts price demands on sugar as well. Add in the high labor cost due to unions and the First “Lady” browbeating kids into eating arugula and lobster bites as a snack and you end up with Twinkies having to cost more than the market will bear and the company can’t make its evil evil profit margins.

    • captadam says:

      Sounds like you got Rush Limbaugh’s memo for the day. Good job, sir.

      • Yomiko says:

        My favorite part is the quotes around “Lady” as though she is, perhaps, a man. That would make the tinfoil hat theory set complete. Not only is he 1) not a citizen and 2) a secret muslim, but 3) his “wife” is a tranny, so he is 4) gay and 5) his children are illegitimate.

        Of course I know Mansfield is more reasonable than this (i have seen a lot of his comments), I just enjoyed the exercise of imagining what an actual crazy person/Limbaugh listener might mean by “Lady.”

        • jake.valentine says:

          Now that Tastykake is out here in San Diego we have no need for Hostess anymore. Now if only Dunkin Donuts would expand to our area………

    • Cat says:

      Let us not forget that US sugar tariffs force Americans to pay about double what the rest of the world pays for *real* sugar.

      • quail says:

        True that. The sugar tariff is idiotic and was created to save sugar producers in Florida. The stupidest part is that in trying to save hundreds of jobs, the tariff cost thousands of jobs in the candy industry.

        If we could only get rid of the crazy banana tariffs too, which only benefit Dole and a few others. Then we could get some real plantains into the country and discover what we’ve been missing for decades.

    • ARP says:

      So much trolling.

      Yes, her “move” campaign is “browbeating.” Or, if you’re Michelle Bachman, “the government is telling us what to eat.”

      http://www.letsmove.gov/ Yep, it’s a real commie website.

      Oh, and if you look at the bottom of the page, there are some references and tools to help you eat healthy on a budget.

      http://www.letsmove.gov/eat-healthy

      I don’t see many references to lobster here.

      http://www.choosemyplate.gov/food-groups/downloads/Sample_Menus-2000Cals-DG2010.pdf

      Re: your other issues.

      1) Unions provided concessions a few times over the past few years.
      2) How many new products has Hostess introduced? What was the CEO pay? Why was he paid so much if they were doing poorly. Are the unions also responsible for their accounting problems. Are teamsters accountants?
      3) What were corn subsidies like under Republican rule? Have they increased or decreased? By how much? Are we using more ethanol? Did Obama regulations force people to use more ethanol? We haven’t passed any major changes in energy law or policy. So where is your source of this information? The reality is that corn-belt states are swing states and so both parties pay them off.
      4) The Ag lobby actively encourages high tariffs on sugar.

      Tell Rush and Hannity, I said hello.

  17. drblair says:

    Well if they would stop F**king around with the twinkie recipe!

  18. Phil Keeps It Real [Consumerist] says:

    This is the perfect situation for a bailout, not banks !

  19. Karney says:

    The union is what is killing this company. Read the linked article and some others and you can see they need to pay in 200 Mill a year in pensions and are about 2 Billion behind at that…

    I don’t know how or why this wasn’t solved the last time they filed several years back, but its really going to kill the company.

    • ARP says:

      Why didn’t the keep up with pension payments? How much was the CEO making when they were doing poorly? The unions made concessions in 2007 and 2009, I believe. Why haven’t they innovated their products?

    • dg says:

      The UNIONS (note plural) are killing this American Icon. I admit it, I enjoy Twinkies, HoHo’s, SuzyQ’s – and I have since I was a kid. I’m not obese, I practice restraint in my enjoyment, I’d hope that others would be able to enjoy the products (in moderation) as well. But that said, if the UNIONS don’t stop with their inane rules – this company won’t be able to compete in the market, and it will go under. When you have to use one truck to deliver bread and another to deliver snack cakes because of Union Rules, that’s stupid. When you have to use one employee to deliver a product, and another to stock the shelves at the delivery location because of Union rules, that’s stupid. When you have to continue to fund pensions from companies you acquired based on decades old contracts – that’s stupid.

      The union might be there for collective bargaining, but damn it – it’s long past the time when the Unions could be considered the good guys. All they do is drive up costs for companies, and subsequently for us Consumers. If the Union wants to preserve jobs for their members – then the Union needs to shoulder some of the burden. They need to make it so that the company is competitive – MORE competitive, MORE efficient, and MORE effective than the competitors. They need to make certain their members are well-trained, and that those who aren’t get trained – ON THE UNION’S DIME. They need to kick their members in the behind when they become sloth like, and get rid of them when they’re useless. They need to be a partner in the business.

      Otherwise, what’s the value add for the employer to have to deal with all the Union idiocy? Why wouldn’t an employer want to go BK, jettison all of the idiocy, and hire new workers who can do the same job, at a lower cost, and higher effectiveness and efficiency?

      Oh, because of some misguided belief that Companies have to provide a “living wage” to employees? BULL! They don’t owe anyone anything except their shareholders. Employees are TOOLS to be used to meet the goals of the Company – if there’s a better, faster, more effective, efficient, and less expensive tool to be used – you get it. Otherwise your competitors will, and you’ll be out of business. The sooner the Unions figure this out – the better.

  20. Straspey says:

    A little point of reference -

    I can recall buying a package of two Hostess Chocolate Creme-Filled Cupcakes when they were about 15% larger than they are today and only cost — ten cents.

    Even today, there are those moments when I pass the junk-snack display in the convenience store and think, “Wow – wouldn’t it be nice to have a Hostess Cupcake or a couple of Suzy-Q’s for a rare treat.” — but then I see the price, which here in NY City is about $1.19 these days – and it just doesn’t make sense.

    But don’t despair – there’s always Krispy Kreme.

    Have you seen their new calendar for 2012 ??

    http://www.angelfire.com/ak2/intelligencerreport/krispy_kreme12.html

  21. Dallas_shopper says:

    I can’t imagine Twinkies ever going away.

    • ChuckECheese says:

      Twinkies and other Hostess cakes are outmoded snacks. Nobody wants semi-dry, semi-tasteless sweet bread when there are so many other more delicious things available to snack on, like endless ice cream, churros, cheeseburgers and energy drinks.

  22. DrLumen says:

    Considering how they are MASS produced, the few pennies for ingredients and what they sell for it seems to me they have a helluva margin on their stuff. It’s hard to believe labor eats up that much profits – oops, sorry for the pun.

  23. Ephraim says:

    One of the things that I dislike about bankruptcy is how mismanaged corporations get to steal the shareholder’s money and hand the company over to the bondholders, when what should really happen is the company should be liquidated and some new and efficient company should fill the gap created.

    What I like about serial bankruptcy is that it proves me right. If you can’t run the business profitably… here’s the door, don’t let it hit you in the ass on the way out. Oh… and can we have your salary back, because you obviously didn’t earn it.

  24. Cat says:

    How will the USA Olympic Team win the Decathlon without Little Chocolate Donuts on their training table?

  25. PLATTWORX says:

    I give it about a week before we hear Grupo Bimbo is buying Hostess. Heck, they own almost every other “mass market bakery brand” in the USA these days.

  26. Talisker says:

    Ah, yes, yet another company that has been around for 100 years brought to it’s knees by MBAs who decided to take out nearly $1 billion in debt.

  27. moonunitrappa says:

    If they had only left out animal products such as lard from their products, they might avoid the big B. I stopped eating their crap 20 years ago went I went veg. In hindsight, maybe I should be thanking them for leaving it in.

  28. PsychoRaven says:

    NOOOOOOOOOOOOOOOOOOOO!!!!!!!!

    Oh wait I don’t think I’ve eaten anything of theirs in years. Although their Nature’s pride bread isn’t bad. With so many generic Twinkies, Cupcakes, etc out there now it doesn’t surprise me they’re hurting. The insane amount of employees probably doesn’t help either.

  29. pot_roast says:

    They also face competition from trash like “Little Debbie” and the Bimbo brands. A Mexican company that’s been buying up American ones, like Sara Lee, and then catering heavily to Hispanics. They’re a growing market segment, and it’s taken away from Hostess for sure.

  30. Gehasst says:

    “Gird your Twinkies” Seriously Mary Beth Quirk? No, seriously? You need to run your articles by the editor or someone before they are posted. You have so many basic typos or errors in your articles, its nuts!

  31. david.c says:

    I don’t buy hostess stuff cause it’s far and away the most expensive sweets on the shelf. I don’t see the *value* in paying 30% or more for a product just so some union worker has a pension.

    No thanks …

  32. Rocket says:

    Where’s the cream filling?

  33. sock says:

    Twinkie filling timeline, the downfall of Hostess:

    cream filling ………. creme filling ……………… creamy filling ………….
    (I am born) ………………………………………………………………(today)

  34. RiverStyX says:

    Aw, first Tastykake..now this. America is fat as hell, they can’t keep a donut company in business? Too much competition I suppose.

  35. The Slime Oozing Out From Your TV Set says:

    Can they get back on store shelves en masse? I don’t get the bread, since *ALL* mass market whole grain bread sucks, but their confections have been taking up less and less space on the shelves over the years, compared to their competitors, such as Little Debbie (you eat a ho-ho and swiss roll, and honestly tell me, after you get over the sugar coma, that the swiss roll was better! I dare you!). While unhealthy as can be, I prefer Hostess when I’m in that kind of mood, but donuts and twinkies are the only items available at most supermarkets, now.

    If they are in this deep, they probably need a baking goods company with competent management to buy them, like what happened with Archway.

  36. 451.6 says:

    Wait, then what will they deep-fry at the State Fair?! The Heart Attack Platter just won’t be the same without twinkies.

  37. JSK says:

    Doesn’t help that their brand name products are very, very overpriced in comparison to their competitors. I bought twinkies this week for the first time in probably 5 years because they were on a B.O.G.O. sale. They are too expensive otherwise.

  38. TheUncleBob says:

    Dear Hostess:

    I have a three point plan to help restructure your company so it will be profitable again.

    1) Make Chocodiles nationwide.
    2) Sell them, nationwide.
    3) Reap the profits.

  39. Rhinoguy says:

    I ain’t skeered as long as there are still snack crackers and Little Debbie.
    http://www.youtube.com/watch?v=VHRDxWHYU8M

  40. Levk says:

    Their stuff to expensive really so why spend 3$ on break when i can spend 1$ on bread just as good