July 18, 2016

Hostess Emerges from Bankruptcy

While those of us in Tastycake country may not have felt the same impact as the rest of the world when Hostess Brands company declared bankruptcy in 2012, there is good news coming for everyone who likes to snack on a Twinkie from time to time. The company has pulled itself out of financial ruin over the past year and is back with a vengeance.

What went wrong

Originally crippled by dropping sales due to a health food craze, as well as union disputes internally, the snack giant has a long history as a successful business in America.  Their declaration of bankruptcy made headlines across the country and caused more than a few Twinkie aficionados to stock up on the snack cake as if it were the apocalypse. Now it looks like the company has a great future ahead of them, again.

Bright future ahead

The company was brought back from the dead, so to speak, as a result of private-equity funding. Their current market value is recorded at $2.3 billion and has just 1,750 employees rather than the 22,000 they once commanded. This spring, they had a $650 million revenue from the past year, and growing.

Why it matters

This is a tremendous feat for the company, and a sure sign to other major companies that filing for bankruptcy is not necessarily the same death-knell that it was once: these choices can be the best financial move for the company, but do not need to signify the end.

How it will work

Hostess has decided to go public, and is riding on the support of C. Dean Metropoulos, a food industry investor who made a huge commitment to the company with a $410 million investment in 2013. Starting this fall, the company will be listed on the NASDAQ exchange, under the leadership of Metropoulos and a private-equity firm with high stakes in the snack food’s success.

What will change

We’re not yet sure of what, if anything, will change about the offerings of Hostess to possibly corner a new market and avoid running into the same difficulties that damaged them before. Some have speculated that they will bring more healthy snacks into their repertoire, but nothing has yet been officially announced.

We do know that they will be adding more preservatives to contribute to a longer shelf life of their products, an area where they were already almost legendary. They will continue to roll out their old favorites of Donettes, Ding Dongs, Fruit Pies, and Ho Hos.

Whether you’re eagerly awaiting the revival of Hostess or are content with your Kandy Kakes and Krimpets, the revival of this exciting company should be good news to everyone. And it’s a welcome sign that bankruptcy does not need to be the end all be all of your financial future!

For a free consultation on bankruptcy or in any of our other practice areas, call the Law Office of Michael Alan Siddons today at 619-255-7500. We look forward to hearing from you soon.