Last year, the internet was abuzz after Hostess Brands filed for Chapter 11 bankruptcy. People feared that their beloved sponge cake treat, the Twinkie, would disappear forever as a result of the bankruptcy (far fewer tears were shed for Ho Hos and Ding Dongs). The fears were legitimate — but it appears they have been allayed, as a couple of investors have turned into heroes for the Twinkie faithful.
The two investment firms — one that owns Pabst beer, and another that has a stake in Hardee’s and Carl’s Jr. fast food restaurants — have agreed to a $410 million deal that will see them take over numerous brands from Hostess, including Twinkies, Ho Hos and Ding Dongs. One of the firms has the ambition to get the treats back on the shelves by the summer, and there could be some celebrity endorsers (Will Ferrell was floated as a potential pitchman).
As we see here, bankruptcy really can prove beneficial for not only the filing company — but for others as well. This deal will help Hostess out tremendously; while the investment firms get a chance at reviving a brand that has been under financial strife for the better part of a year.
Another element to this story that is particularly relevant to the legal side is the actual sale of these brands to the investment firms will take some time to approve. When a bankrupt company sells assets, it has to get approved in a variety of ways. That is why it is critical for any bankrupt entity to consult an experienced attorney to ensure their rights and their side of the deal is being supported and upheld.
Source: Associated Press, “Bankruptcy Judge Approves Twinkies Sale,” March 19, 2013
- Please visit our Los Angeles Chapter 11 page to learn more about how bankruptcy can actually help a business.