There’s trouble in Twinkie-land. Hostess Brands filed for Chapter 11 bankruptcy protection today to confront burdensome debt and labor costs, less than three years after completing an earlier restructuring.
The baker ended an earlier round of bankruptcy hearings in February 2009 when buyout firm Ripplewood Holdings LLC and lenders took control of Interstate Bakeries Corp., which was renamed Hostess Brands.
In a prepared statement, Hostess blamed the latest bankruptcy filing on a weak economy and costs tied to pension- and medical-benefit obligations. The Texas-based baker intends to withdraw from pension plans and modify collective-bargaining agreements with unions, according to court documents.
“This company has tremendous potential if we can remove barriers to success,” said CEO Brian Driscoll said in the statement.
Hostess had total assets of about $982 million and total liabilities of about $1.4 billion as of December 10, according to court documents. The Chapter 11 filing was assigned to U.S. Bankruptcy Judge Robert Drain in White Plains, New York.
In bankruptcy, Hostess said it hopes to keep negotiating with 12 unions to modify the collective-bargaining agreements governing the employment of its union workers, who comprise 83 percent of its approximately 19,000 employees.
“Whether the debtors can achieve long-term viability depends directly and substantially on the debtors’ ability to achieve dramatic change to their labor agreements, with a corresponding material reduction in their cost structure and legacy pension and medical obligations, and a restructuring of their capital structure,” Hostess said in court papers. “That is the purpose and the focus of these Chapter 11 cases.”
If Hostess can’t obtain voluntary modifications to the agreements, it will ask the U.S. Bankruptcy Court in White Plains, New York to let it reject the agreements altogether.
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