What! Hostess Brands Files for Bankruptcy, That Cannot Be Right – What Will America Be Without Twinkies and Hostess Cupcakes

Well Healthier and Less Obese for One Thing

Flying under the radar of business stories was the fact that Hostess Brands, the company that makes sugar rich snacks like cupcakes and Twinkies has not been in good financial health in the past decade.  Now we learn that the company has filed Chapter 11, again.

The company, which has assets of roughly $1 billion, has been struggling under the weight of $1 billion debt load and soaring expenses. Hostess has up to 100,000 creditors, chief among them the Bakery and Confectionery Union pension fund, according to the Chapter 11 petition, filed in United States Bankruptcy Court in lower Manhattan.

Now aside from the culinary tragedy, the real question here is what happened to vaunted American business know how, you know, the kind of know how we now want to run our government.  How did this company find people to lend it $1 billion, given its history?

in 2004, confronting soaring labor costs and fluctuating prices of flour and other ingredients, the company filed for Chapter 11. Then known as Interstate Bakeries Corp., the baker completed the restructuring process in February 2009, when Ripplewood Holdings LLC, a New York private equity firm, seized control of the company.

Oh yes, the company was turned over to a private equity company, the kind that invests little equity, borrows a whole lot of money from naïve lenders and in some (but not all) cases manages the company into the ground. 

Yep, that explains it.