Residents of Illinois love Twinkies, right? Hostess Brand, Inc. says that it is currently in talks with 100 companies interested in purchasing its brands, including Twinkies, Ding Dongs and Ho Hos. Hostess is currently in the process of a Chapter 7 liquidation bankruptcy. The liquidation is expected to last about a year.
Hostess filed for Chapter 11 reorganization bankruptcy in January. Hostess’s wind down was approved on a provisional basis; however, the company is seeking final approval for the plan, including the quick sale of Hostess brands. Although the company has faced declining sales over the years, it still sees sales of $2.3 to $2.4 billion. Bonuses for executives have recently been under consideration by the bankruptcy court. There has been some internal criticism from the baker’s union of the current management’s previous failed attempts at reorganization. Dissatisfied, the union has requested that the court appoint an independent trustee to oversee the liquidation.
Commonly, a Chapter 7 liquidation bankruptcy is an orderly process and is supervised by the court. Many Chapter 11 reorganizations bankruptcies can become Chapter 7 liquidation bankruptcies in certain situations. Basically, in a Chapter 7 liquidation bankruptcy, the debtor’s assets are reduced to cash to make payments to creditors to eliminate the debtor’s debt. The liquidation of assets to cash is subject to certain exemptions that allow the debtor to retain certain types of property that cannot be liquidated or sold.
For both business and consumers struggling with debt and seeking a fresh financial start, either Chapter 7 for businesses or Chapter 7 for individuals may provide a solution to overwhelming debt. At the conclusion of the Chapter 7 liquidation process, the debtor will receive a debt discharge. For individuals, this can occur as soon as a few months following filing for Chapter 7 bankruptcy. If the debtor is an individual, they may have to undergo a “means test” to determine if they fall below a certain earnings threshold to qualify for Chapter 7 bankruptcy. If they do not, other options are available to those individuals.
For consumers and businesses alike, seeking a fresh financial start, a Chapter 7 liquidation bankruptcy may allow them to start over. This can, in the end, provide hope to the struggling party.
Source: 9News.com, “Hostess says it has over 100 interested buyers,” Associated Press, Nov. 29, 2012
Hostess no longer reorganizing; seeks Chapter 7