Your right! I didn't follow the links and read through your post a little to quickly. I did find a little info on what is and has been going on. I'll post a part of it below, if you want more details you can go here:
http://www.privco.com/private-company/h ... brands-inc
In January 2012, Hostess filed a voluntary petition for its second Chapter 11 bankruptcy. Hostess Brands' private equity owner, Ripplewood Holdings, had negotiated contracts with the unions representing Hostess employees. These union contracts inflated Hostess' labor expenses, eventually forcing the company to file for Chapter 11 bankruptcy. Ripplewood, which had acquired a 50% stake in Hostess following its first bankruptcy, has since increased ownership in the snacks manufacturer and injected $40 million to fund its bankruptcy proceedings. Other Hostess creditors have also helped finance the company's bankruptcy. Two hedge funds, Silver Point Capital (which owns about 30% of the debt) and Monarch Alternative Capital (which also owns about 30%) helped fund the bankruptcy proceedings. In total, to fund bankruptcy costs, creditors added $75 million in debt at a 15% interest rate on top of Hostess’ existing debt.
Exacerbating Hostess’ cost concerns were stagnant sales across its snack foods. Most Hostess products experienced little change in annual sales. Twinkie sales, excluding those at Wal-Mart and club stores, fell by nearly 2% in 2011. Sales growth became more challenging for Hostess as American consumers became more health-conscious. To respond to healthier eating trends, Hostess introduced a brand of wheat bread, Nature’s Pride. Despite double-digit growth in the brand's annual sales, the wheat bread was not as popular at food retailers as its longer-established competitors, and the growth area has not yet contributed significantly to Hostess' top line.
A large part of the bankruptcy proceedings, similar to Hostess’ Chapter 11 filing in 2004, involve negotiations with unions, primarily the Teamsters (the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union is also involved but has chosen not to oppose Hostess’ decisions). Ever since its previous reorganization, Hostess had been paying approximately $100 million annually into a pension fund that covered its employees as well as those of other companies (a multi-employer pension plan, or MEPP, that covers multiple firms in an industry). As of the bankruptcy announcement, the fund was about $2 billion underfunded. Having already lost thousands of jobs in the previous reorganization of Hostess, the Teamsters are reluctant to accept pension concessions. Furthermore, if the bankruptcy court allows Hostess to abandon its pension obligations, the Teamsters could strike, an action that Hostess employees have already ratified 9 to 1.
Both of the hedge fund debt holders (Silver Point and Monarch) are looking to concessions with the unions and possible equity stakes in the reorganized company. The market value of their total debt holdings are estimated at $50 to $100 million, down from their $125 million to $175 million purchase price. If the hedge funds choose to forgive the debt, they could be looking at sizeable equity shares of the reorganized Hostess. Ripplewood, Hostess’ existing equity owners, have little stake in the bankruptcy proceedings since their equity has become essentially worthless following the filing. Negotiations with the Teamsters are mediated by Hostess and carried out by Perella Weinberg Partners on behalf of the debt holders. If a deal is not reached to drastically decrease pension obligations or if an alternative solution is not proposed, then liquidation could result in the loss of thousands of jobs at Hostess, including 7,900 Teamster jobs. As of July 2012, a deal is far from being approved.
Hostess Brands' Bankruptcy Reorganization Plan
In October 2012, Hostess filed a bankruptcy reorganization plan. Part of the plan includes cuts to their employees’ wages, as well as their health and pension plans. Contributions to the Interstate Bakeries Corp. Defined Benefit Plan will be ceased until 2015, resulting in freezing pension plans for two years. An 8% cut on the wages of their employees and a 17% reduction in health and welfare benefits will also be implemented by the plan. In return, the company’s unionized employees will receive 25% equity ownership, as well as a $100 million interest-bearing note and two seats on the board of directors if the plan passes.
The bankruptcy reorganization plan risks initiating a complete liquidation of Hostess’s assets, which could be triggered by strike from the company’s employees. Upon liquidation, the company’s trademarks and recipes would be sold in a bankruptcy auction, most likely to its competitors.
Furthermore, the plan intends to cut at least $1.6 billion in the company’s debt; meaning creditors and investors in the company would completely lose their investment principles. This only applies to the unsecured debt the company holds; if the plan passes the company would still owe about $861.5 million in secured debt. Hostess is currently awaiting a verdict on their restructuring plan from the U.S. Bankruptcy Court for the Southern District of New York.
Hostess Brands Files For Chapter 7, Intend To Close Business & Liquidate Assets
Hostess Brands filed a plan to emerge from bankruptcy in October 2012 which will involve significant cuts in employees' pay, health and pension plans, including a 17% decrease in health benefits. Subsequently, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union began a national strike on November 9, 2012 in protest of the bankruptcy plan.
Hostess Brands management issued an ultimatum on November 14, 2012 for workers to return to work or face unemployment, but the union did not respond favorably. As a result, Hostess was unable to continue business and filed for liquidation in bankruptcy court on November 16, 2012. Hostess estimates the process, which would wrap up operations at the company's plants, depots, retail outlets and corporate offices, will cost $41.3 million in the first 13 weeks and that the liquidation of its accounts receivables and inventory will generate $77 million in the first 10 weeks. The entire process should take about a year and financed by the company's $75 million bankruptcy loan.
