Interstate Bakeries Corp., the makers of Hostess Twinkies and Drake’s cakes, filed yesterday for Chapter 11 bankruptcy protection citing declining sales, rising employee healthcare and higher costs for ingredients and energy among other factors.
The company has struggled with more than $1.3 billion in debt and weak demand for bread products amid the low-carb diet craze. IBC also cited a high fixed-cost structure and excess industry capacity as reasons for its decision to file Chapter 11 in the U.S. Bankruptcy Court for the Western District of Missouri in Kansas City.
Also yesterday, the company’s CEO and Chairman, James Elsesser resigned both positions. Tony Alvarez has been named to succeed Elsesser as CEO and John Suckow was named chief restructuring officer. Alvarez is co-chief executive and Suckow is a managing director of the corporate advisory and turnaround management services firm Alvarez & Marsal, Inc. Director Leo Benatar was elected non-executive chairman of the board, the company said.
The company said it has received $200 million in financing from JPMorgan Chase Bank. It said it would continue to operate its bakeries, outlet stores and distribution centers and deliver products.
Last month, the company said it planned to close its bakery in Buffalo, NY, in October and lay off about 200 employees. The companies three major divisions are headquartered in Phoenix, AZ, Kansas City, MO, and Charlotte, NC. It has 57 bakeries and employs more than 33,000 people.
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