Hostess Brands to file for Chapter 11 bankruptcy protection as early as this week, sources say; company has more than US$860M in debt, struggling amid high labor costs, rising prices for various ingredients

Nevin Barich

LOS ANGELES , January 10, 2012 (Industry Intelligence) – According to people familiar with the matter, Hostess Brands Inc. will be filing for Chapter 11 bankruptcy protection as early as this week, The Wall Street Journal reported Jan. 10.

If so, that would be the second major court restructuring for the company over the past several years. Hostess employs about 19,000 people and has more than US$860 million in debt.

Sources say that the company has struggled amid high labor costs and rising prices for various ingredients. These costs have more than offset the company’s approximately $2.5 billion in annual sales, the people said.

Sources added that Hostess owes more than $50 million to venders. These venders are reportedly demanding repayment in a short amount of time due to the company’s financial standing.

The primary source of this article is The Wall Street Journal, New York, New York, on Jan. 10, 2012.

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