The Bankruptcy of Hostess Brands

by Johnny Tisdale on January 7, 2013

Are you so indebted that you have little choice but to file for bankruptcy? If so, then like many others in your situation, you’re probably beating yourself up. Bankruptcy can be extremely stressful. It can make you feel like a complete failure who will never amount to anything. But you shouldn’t let it! Recently I wrote about 10 people who bounced back from financial ruin to become towering figures of world history. It is also comforting to remember that successful corporations go bankrupt from time to time – even those as well known as Hostess Brands, whose products have been household names for decades.

The long history of Hostess is too full of twists and turns to fully recount here. It all began in 1905 in a Kansas City church basement, where Ralph Leroy Nafziger started Nafziger Bakeries. The name would change again and again through a series of mergers and acquisitions. In 1930, Twinkies hit the scene and have been a national favorite ever since. Health nuts will be delighted to learn that for the first few years, these iconic snacks were filled with real fruit. But the company switched over to vanilla cream due to rationing during World War II, and today the baked goods contain such nutritional no-nos as high fructose corn syrup, hydrogenated oils, and artificial coloring.

Financial troubles started in the mid-90s, partially due to the use of other not-so-healthy ingredients: enzymes that extend shelf life. Keeping products on the shelf for a longer period of time may have seemed like a sure way to increase profits. But the plan backfired when both the texture and taste of the snacks were undesirably altered. Also, the Atkins diet enjoyed a resurgence of popularity, with the result that many would-be Twinkie consumers cut carbohydrates completely out of their diets. Add a little competition from Krispy Kreme and it’s surprising that Hostess made it to 2004 before finally filing for Chapter 11 bankruptcy.

Hostess eventually emerged from that first bankruptcy in 2009. Within two years, though, the company would find itself in financial trouble again. This time, “restrictive work rules” were cited as a cause. The company stopped paying its employees their pension benefits in August 2011. At the beginning of 2012, Hostess filed for Chapter 11 bankruptcy once more. Workers nationwide went on strike in November 2012. Later that month, the liquidation plan (and with it, the apparent death of the beloved Twinkie) was finalized.

Is the Twinkie really dead? Probably not. Both Walmart and Kroger have already placed bids for the assets of Hostess Brands. Yet again we have proof that bankruptcy is not the end; it’s a new beginning! The bankruptcy of Hostess also shows that there’s no reason to feel sorry for yourself if you’re filing for bankruptcy as an individual. Bankruptcy can happen to anyone – legal “persons” such as the Hostess corporation and natural persons like you and me.

If bankruptcy is something that you’re considering, give me a call at 510-233-7700 to schedule your free consultation. I’ll help you bounce back from this setback. There’s no reason you can’t move on to achieve the success for which you know you’re destined.

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Johnny Tisdale

Paralegal at Dowe Law Firm
Johnny Tisdale is a paralegal, web designer, and writer at the Dowe Law Firm. He earned his BS in psychology and ABA-approved paralegal certificate from Auburn University Montgomery in 2011.

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