Bus205 Case Study

Case 5

Debt Financing and Bankruptcy

Lynna Revard

Trident University

Abstract

The purpose of this paper is to go into detail and explain the different aspects of debt financing, bankruptcy, and the outcome of Hostess Brand Inc., filing for bankruptcy. It will go into detail of what debt financing is how to avoid different aspects of it. I will also go into detail and explain not only the history of bankruptcy, but also the different chapters of bankruptcy and how each one differs from the other. You will read about things that you might already know and hopefully by the end of this paper I am able to teach some things that you were possibly not aware of.

Main Body

Hostess Brands Inc. and its beloved bread and snack cake products date back to the late 1800s. Its brands are some of the best known snacks and breads in the United States. They make many of the top-selling snack cakes in convenience stores, including Twinkies®, CupCakes and Fruit Pies. Before becoming Hostess Brand Inc., the company was known by many names. Interstate Bakeries Corporation, Holsum Bakeries, Bakers Inn, Hostess Bakeries, and Hostess just to name a few. Effective November 2, 2009, the company was renamed Hostess Brands, Inc. after the cake division that featured Twinkies and Cupcakes although it continues its bread line including Wonder Bread. It has been a very successfully company since it started its productions however; in 2004 the company had to file for bankruptcy and again in 2012.

The recent file for bankruptcy by the company, from what they said “is stated to be due to the company said it "is not competitive, primarily due to legacy pension and medical benefit obligations and restrictive work rules." Hostess Brands Inc. filed for Chapter 11 bankruptcy protection in efforts to confront burdensome debt and labor costs that the company has been fighting for so long. Chapter 11 bankruptcy was filed due...