Explaining Southern California's economy

Twinkies get even more troubled

Hostess Twinkies Celebrate 75th Anniversary

Tim Boyle/Getty Images

Four of the Twinkies that (ahem) drove Hostess Brands into a second bankruptcy since 2004.

Hostess Brands, the company that makes Twinkies, is in bankruptcy — the second time since 2004. And if it can't come to terms with both its creditors and its union workforce, it could be game over for the allegedly indestructible cream-filled cake-y yellow tube of fun and all its snack-y brethren. A strike looms. This is from CNNMoney:

"We would no longer have cash to keep operating," said Hostess management in a letter sent to employees on Monday. "All Hostess Brands operations would shut down and liquidation would begin. The 18,500 jobs, plus the health insurance that comes with them, would be lost for good."

The company filed for bankruptcy in January...[M]anagement has said that the investors who are financing the company during bankruptcy would pull out if there is a strike.

Liquidation means that Hostess Brands would essentially be sold for parts. And you have to figure that, if there's anyone out there interested in the Twinkies brand, it would be snapped up in a serious hurry. However, this really looks more like brinksmanship, between management and labor — a classic labor struggle, with this latest bankruptcy taking on a distinctly strategic flavor. The idea is to dispense with labor obligations.

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Chevys and Twinkies both survive the apocalypse...and bankruptcy?

I think my favorite Super Bowl commercial was from Chevy. In it, a guy driving his Silverado pickup with his dog discovers that he's survived the Mayan 2012 apocalypse. As grateful man and beast drive through a ruined landscape, the rubble of cities, flaming Big Boys, with spacecraft crashed along roadsides, volcanoes erupting, and asteroids still hurtling toward the Earth from space, they realize their good forture as Barry Manilow serendes them with "Looks Like We Made It." They then discover that they aren't alone. Other Chevy owners have also survived. And the Ford owner? Well, he didn't make it.

But the Twinkies did! Interestingly, Chevy had to survive General Motors' bankruptcy in 2009 to be able to survive the 2012 end of the world. The company that makes Twinkies, Hostess Brands, also came through bankruptcy, back in 2009 after declaring Chapter 11 in 2004. It just declared bankruptcy again, however. In TV land, the apocalypse probably put an end to all that. Luckily, as it turns out — we all knew Twinkies would survive, even if we weren't sure about Chevys.

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Hostess bankruptcy: It's the trouble with Twinkies

Hostess Twinkies Celebrate 75th Anniversary

Tim Boyle/Getty Images

Four of the Twinkies that (ahem) drove Hostess Brands into a second bankruptcy since 2004.

Don't worry: the Twinkie supply won't dry up. Hostess Brands, however, is filing for Chapter 11 bankruptcy for the second time in the past decade. Last time around, it set a record for languishing in restructuring. And even though a bankruptcy double-dip is never a good thing, Hostess' investors have enough confidence in the ongoing strength of the Twinkie-and-Wonder Bread market to produce additional financing.

Hostess, like a lot of companies that have been around for a while, has both a debt and a legacy cost/union problem. Total debt is "more than $860 million," according the Wall Street Journal. The pension plan is underfunded by $2 billion and fairly complicated, to boot, covering far more than employees than actually work for Hostess. And the union contracts...well, Chapter 11 will provide the excuse to renegotiate them.

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