Hostess Brands' private equity and hedge fund owners put the company into liquidation on Wednesday as other private equity firms prepared to make their offers for its holdings.
A federal bankruptcy judge in White Plains, N.Y., approved Hostess' bid to go out of business the day before Thanksgiving, after a last-ditch mediation effort failed to win a deal between the company, owned by p.e. firm Ripplewood Holdings, and one of the company's unions. The company began to lay off most of its 18,500 employees in the wake of the decision.
Hostess, which makes Twinkies, Ho Hos and Wonder Bread, isn't likely to be out of business for long. Hostess lawyer Heather Lennox said that it has received "a flood of inquiries" since filing for bankruptcy earlier this month, a week after the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union launched a strike against the company. "We therefore think there could be very healthy competition," she told the court.
Among the competitors will likely be private equity firms. Metropolous & Co. and Sun Capital Partners have both been mentioned as possible bidders.
Hostess, which boasts hedge funds Monarch Alternative Capital and Silver Lake Partners as creditors, said it would return to court within a few weeks to begin auctioning its assets.