Hostess Preparing for Bankruptcy

It was announced that Hostess Brand, Inc., the Irving, Texas based wholesale baker, was preparing for chapter 11 bankruptcy this week.  This is the Company’s second bankruptcy in the last two years.  The bankruptcy may allow the Company to reduce its debt and renegotiate its labor contracts.

Hostess has been facing cash constraints, despite recent investments of $40 million by Ripplewood Holdings, its current owner, and $20 million in loans last year by other equity firms, like Monarch Alternative Capital and Silver Point Capital.

This is another sign that weaker consumer spending and higher operating costs are hurting the food industry, as well as other industries (i.e., airline).