Twinkies likely to survive Hostess asset sale

Twinkie lovers, relax.

The tasty cream-filled golden spongecakes are likely to survive, even though their maker will be sold in bankruptcy court.

Hostess Brands Inc., baker of Wonder Bread, Twinkies, Ding Dongs and Ho Ho's, will be in a Manhattan bankruptcy courtroom Monday to start the process of selling itself. The company, weighed down by debt, management turmoil, rising labor costs and the changing tastes of America, decided Friday that it no longer could make it through a conventional Chapter 11 bankruptcy restructuring.

Instead, it's asking the court for permission to sell assets and go out of business.

But with high brand recognition and $2.5 billion in revenue per year, other companies are interested in bidding for at least pieces of Hostess. Twinkies alone have brought in $68 million in revenue so far this year, which would look good to another snack-maker.

"There's a huge amount of goodwill with the commercial brand name," said John Pottow, a University of Michigan Law School professor who specializes in bankruptcy.

Hostess has said it's received inquiries about buying parts of the company. But spokesman Lance Ignon would not comment on analysts' reports that Thomasville, Ga.-based Flowers Foods Inc. and private equity food investment firm Metropoulos & Co. are likely suitors. "We think there's a lot of value in the brands, and we'll certainly be trying to maximize value, both of the brands and the physical assets," Ignon said yesterday. He said it's possible some of Hostess' bakeries will never return to operation because the industry has too much bakery capacity.

Little will be decided at Monday's hearing before Bankruptcy Judge Robert Drain, Pottow said. The judge eventually will appoint a company that specializes in liquidation to sell the assets, and the sale probably will take six months to a year, Pottow said.