Hostess Brands files for Chapter 11 bankruptcy protection

Jan 11, 2012 at 1:35 p.m. ET

The maker of the iconic Twinkies and Wonder Bread brands just announced that it is planning on filing for Chapter 11 Protection.

Hostess Twinkie

This marks the second court restructuring for the company in just two years. The company states higher labor costs as the primary reason for the move. The cost of ingredients has also increased in recent years.

Hostess claims that rising labor and ingredient costs – primarily flour and sugar, two key ingredients that make up much of the company's portfolio of foods – were the main drivers for the most recent bankruptcy filing. However, it seems likely that the company was also affected by consumers' changing eating habits over the last few years. The surge in farmers markets, low-carb diets and a general move towards whole grains may have all played a part in Hostess' reported $1.4 billon debt.

They'll keep baking-- for now

The good news for those that still love the cream-filled treats – Hostess says they will continue to maintain operations thanks to a $75 million financing commitment from lenders. The goal is to restructure some of their labor agreements to help cut costs, but that requires voluntary compromises from union workers. Even if agreements are reached, though, Hostess is still trying to recover from bankruptcy proceedings that stem back to February of 2009.

Stock up

So what will all the Twinkies fans do now? And what about all the restaurants and bars priding themselves with serving up fried Twinkies? Since Twinkies are known to have an extra-long shelf life, expect to see people stockpiling Twinkies in the coming days. Get yours while you can!

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