Twinkies May Survive Hostess Bankruptcy

Twinkies may survive the carnage at Hostess Brands just yet.  Reports out of New York are that there are plenty of companies who will probably be interested in buying the company, or at least the recipes and brand names, from Hostess to continue the Twinkies line for years to come.  So be careful about spending $100 on a box of Twinkies on eBay.

Hostess Brands is planning to start the bankruptcy process in New York today, saying that it cannot sustain the Chapter 11 process and asking instead for permission to sell the company and its assets.  Hostess is weighed down by debt, management turmoil, rising labor costs, and the changing tastes of America.  If they cannot find a buyer, they will shut their doors for good.  But the brand recognition of the products is really high, and the company did $2.5 million dollars in revenue last year, so there are plenty of companies who will likely want a piece.

John Pottow, a University of Michigan Law School professor who specializes in bankruptcy, said:

“There’s a huge amount of goodwill with the commercial brand name. It’s quite conceivable that they can sell the name and recipe for Twinkies to a company that wants to make them.”

Hostess spokesman Lance Ignon would not comment on analysts’ reports that Thomasville, Georgia-based Flowers Foods Inc. and private equity food investment firm Metropoulos & Co. are likely suitors. Metropoulos owns Pabst Brewing Co., while Flowers Foods makes Nature’s Own bread, Tastykake, treats and other baked goods. Messages were left for spokesmen for both companies on Sunday.

Ignon told the press on Sunday:

“We think there’s a lot of value in the brands, and we’ll certainly be trying to maximize value, both of the brands and the physical assets.”

The company filed a motion to liquidate Friday. The closing of the company’s doors will mean 18,500 lost jobs. Hostess said employees at its 33 factories were sent home and operations suspended. Its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.