So What Happens to Hostess Now?

Posted on: 6:49 pm, November 16, 2012, by

LENEXA, Kan. — Hostess Brands – maker of Twinkies and Wonder Bread, among other iconic brands – announced that they are asking for permission from a federal bankruptcy court to shut down, blaming a strike by bakers unhappy with the new contract imposed on them.

But fans of Twinkies, Ding-Dongs and other snacks are wondering what comes next? Is this really the end of the line for Hostess?

Bankruptcy attorney Michelle Suter says that according to the Hostess company’s filing in bankruptcy court, the company will spend the next two months winding down operations in all of it’s 33 plants, and the hundreds of distribution centers and retail stores. It will go from almost 19,000 employees, to 3,000 and eventually winding down to a couple of dozen employees within the year.

“This time of year it’s hard to hear about people losing their job but businesses have to make tough decisions also,” says Suter.

Employees on the picket line had said they’re holding out hope for a new buyer, but Hostess has said there is no such buyer out there. Suter says if that’s the case, Hostess will have to sell off the company bit by bit.

“The facilities, the recipes, the equipment, the trademarks, all of the property of the company will be sold in some fashion,” she says.

Does that mean no more Twinkie or Wonder Bread? Not necessarily, because a company could buy the recipes and trademarks.

But as Hostess collects all this money in the sale, who gets paid?

Suter says that’s all done according to the priority of the bankruptcy court. Suter says government debts are paid first, and then it’s secured claims, a lender that might have a lien on the property or equipment. So what about the creditors who are owed money, like a flour company, and what about the shareholders?

“Unfortunately some of those go last,” Suter says, meaning they may not get anything at all.

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