Twinkie Maker Hostess Files for Bankruptcy

Twinkie Maker Hostess Files for Bankruptcy

NEW YORK (TheStreet) -- Hostess Brands, the maker of Wonder Bread, Ding Dongs, Ho Ho's, Sno Balls, Drakes Cakes and Twinkies, has filed for bankruptcy after being unable to manage liabilities like unionized pension plans and a large debt stock.

For the company, which has made popular American breads and desserts since the 1930s, the filing is its second trip into bankruptcy. In 2004, the company formerly known as Interstate Bakeries went bankrupt and stayed in administration for over four years until it re-emerged as Hostess Brands in 2009.

Hostess, which is owned by private-equity firm Ripplewood Holdings, is struggling to meet interest payments as investors seek concessions from 19,000 employees, who have 80% unionized contracts according to reports from The Wall Street Journal.

Burdened by debts used for acquisitions and pension liabilities, Hostess reportedly suspended payments on union pensions in December and was struggling to make interest payments on a $700 million loan. In its bankruptcy listing, Hostess Brands claimed between $500 million and $1 billion in assets and more than $1 billion of liabilities. The company also listed the Bakery & Confectionery Union & Industry International Pension Fund as its biggest unsecured creditor with a $944.2 million claim.

Hostess Brands carries additional liabilities after multiple acquisitions and owes millions in additional creditor payments. The company is now arranging $75 million in debtor-in-possession financing from its lenders, according to the Journal.

When Hostess Brands emerged from a 2004 bankruptcy, it fought a 2007 bid from Mexican baked goods giant Grupo Bimbo and Ron Burkle of the Yucaipa Cos.

It exited bankruptcy in 2009 in a deal financed by Ripplewood Holdings, which received a controlling stake in the company for a $130 million capital commitment. General Electric's (Stock Quote: GE) GE Capital division, Monarch Alternative Capital and Silver Point Capital also provided hundreds of millions in rescue financing.