BoP: Don’t Worry! Twinkies Likely To Survive

Sit back and relax Twinkies enthusiasts. Your favorite treat is likely to survive despite the fact that Hostess declared bankruptcy last week.

Although the company has many fees and rising labor costs, along with some debt, the brand receives quite a bit of recognition for its hefty $2.5 billion in revenue each year. Other people, like Marc J. Leder, the co-owner of the Philadelphia 76ers, have already shown interest in the company.

“There’s a huge amount of goodwill with the commercial brand name,” said John Pottow, a University of Michigan Law School professor who specializes in bankruptcy. “It’s quite conceivable that they can sell the name and recipe for Twinkies to a company that wants to make them.”

Thomasville, Ga.-based Flowers Foods Inc and Metropoulos & Co. have also made inquiries about purchasing part of the company.

“Little will be decided at Monday afternoon’s hearing before Bankruptcy Judge Robert Drain,” Pottow said. “The judge eventually will appoint a company that specializes in liquidation to sell the assets, and the sale probably will take six months to a year to complete,” Pottow said.

It may be a few months, but don’t lose hope.

According to ABC News, Hostess CEO Gregory Rayburn said on Sunday, “I think we’ll find buyers. A few have surfaced already since Friday expressing interest in the brand to acquire them.”

Hostess filed for Chapter 11 bankruptcy protection in January. This is the second occasion in less than a decade that Hostess has filed. Its predecessor corporation, Interstate Bakeries, sought after bankruptcy protection in 2004 and changed its name to Hostess following their rising in 2009.

There were many contributing factors to the company’s downfall. First off, they noted that the costs associated with unionized workers were affecting their budget significantly. Second, they pointed out that management oversights had hurt the company. Just this last spring it came into the light, that nearly twelve executives were receiving outsized bonuses of up to 80 percent.

Frank Hurt, president of the Bakery, Confectionery, Tobacco Workers and Grain Millers union, told the WSJ he was comforted by the rush of consumers to purchase Twinkies and other products for fear the popular brands will go away.

“People are going crazy because they think they’re not going to be able to get any Twinkies or Ho Hos or Wonder Bread,” he told the WSJ. “They’ll be produced somewhere, sometime and by our members.”

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