Hostess has filed for bankruptcy for the second time in the last few years. The last time they filed was in 2004 and was out of bankruptcy in 2009. “Hostess returns to bankruptcy over pensions” from Reuters.com reports from the court papers that “Hostess’ declining financial performance, crippling legacy costs associated with its pension plans and massive debt levels” are causes of the filing.
The company reports $860 million in debt, $981.6 million in assets and $1.43 billion in liabilities. The article reports that Hostess stated “it does not expect disruptions in the manufacturing and delivery of its products during the bankruptcy process”. The company has also stated that they have failed at attempting to sell parts of its business to other similar companies.
Fortunately, Hostess sales pastries, which are short-term, inexpensive products. Their customers are guided by appetite, which is not effected by the company’s bankruptcy. If this were a tech company, some customers would be wary to purchase an expensive, long term product from a bankrupt company knowing the product could be discounted and the company may not be in a position to offer customer service or honor warranties. After the finances are figured out, Hostess could still have a substantial brand to use.
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