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Hostess -- Maker of Twinkies -- Files Chapter 11
The 82-year-old privately held company, an iconic American brand, had been struggling under a whopping $860 million in debt, escalating labor costs and sluggish consumer demand since it crawled out of its first Chapter 11 in 2009. Then it filed again in January of this year. Management blamed the unions, while union leaders suggested that executives consider their own compensation cuts. For a time, it seemed there was no need for Ding Dong devotees to fret. Hostess received $75 million in financing from a group of lenders, allowing them to continue operating their bakeries and outlet stores. Now, after all the financial finagling, a shutdown might still be imminent. Production at about a dozen of the company's 33 plants has been affected by striking workers who refuse to take a pay cut. The only option for Hostess seems to be finding a buyer with deep pockets and a willingness to bank on the legendary shelf-life of the Twinkie. When the news of Chapter 11 broke early in the year, we asked this pertinent question.