Hostess Brands Inc., made famous by those golden cream filled treats, is once again preparing to file for Chapter 11 bankruptcy protection later this week, according to a The Wall Street Journal report, which cited multiple sources familiar with the company.
This would be second time that Ripplewood Holdings, which owns Hostess, filed for a court restructuring. The company had attempted to get its finances together when it first filed for bankruptcy back in 2004.
According to reports the Irving, Texas, based Hostess has arranged for $75 million in debtor-in-possession financing to keep it solvent during bankruptcy proceedings, as reported by The Wall Street Journal.
The company has tried to move forward even with a diminished cash flow and minimal liquid assets. The company received $40 million from Ripplewood Holdings while Monarch Alternative Capital, Silver Point Capital and others loaned the company $20 million at the end of last year, as reported by The Wall Street Journal.
Once in bankruptcy court, it is reported that the maker of Twinkies and Wonder Bread will try to reduce debt and renegotiate the terms of their labor contracts. Hostess currently carries over $860 million in debt, according to Reuters.
Those familiar with the company have attributed the last court filing on the increasing costs of flour, sugar and other baking ingredients as well as a massive amount of debt.
People associate the brand with sliced bread and sweet treats, according to The Wall Street Journal. It had attempted launching a whole grain snack food line called Nature’s Pride but that venture has not succeeded in producing any substantial revenue.
The company, which was founded in 1930 when it was called Interstate Baking Co. Hostess Brands, operates in 49 states and employs some 19,000 workers. According to the company’s website, their annual sales are around $2 billion.