Bad news for Twinkies lovers: Hostess filed for Chapter 11 bankruptcy protection today. But never fear, the company will continue operating during bankruptcy proceedings with help from a $75 million loan. "We remain hopeful that we can reach an agreement that will allow us to amend our labor contracts so that we can emerge from Chapter 11 as a highly competitive company that provides secure jobs for our employees," said the president and CEO. Not helping matters is the fact that sales are declining, particularly as consumers move away from Hostess' signature white bread to whole grains.
Hostess rakes in around $2.5 billion in annual sales, but employs 19,000 people and owes more than $860 million. High labor costs and increased ingredient prices have been hurting the company, sources tell the Wall Street Journal; in a statement, Hostess also cited "legacy pension and medical benefit obligations and restrictive work rules" as contributing to the problem. The company has filed for bankruptcy protection once before, in 2004, a Chapter 11 case that led to court restructuring but proved to be insufficient.