Twinkies manufacturer files for bankruptcy: sign of the US getting healthier?

 In what could be an indication Westerners are taking the health messages about obesity seriously, the US baking company which makes Twinkies and Ding Dongs has filed for bankruptcy.

Hostess Brands underwent a massive restructuring process three years ago and has been struggling with debts to unions, employees and creditors.

The company, which is based in Irving, Texas, owes $US944 million to the Bakery & Confectionary Union & Industry Pension Fund alone.

Its assets are about $US1 billion and it has up to 100 000 creditors.

Founded in 1930, Hostess operates about 36 bakeries and employs up to19,000 people, most of them union members.

Hostess’ chief unsecured creditors are labor unions and pension funds that represent the companies employees, according to the Chapter 11 petition filed to the Unites States Bankruptcy Court in New York.

A Chapter 11 is a chapter of the US Bankruptcy Code which businesses or its creditors can file for when they are unable to service debt or pay creditors.

The business or its creditors can file with a federal bankruptcy court for protection under either Chapter 7 or Chapter 11 and under.

Usually a Chapter 11 petition means the debtor remains in control of its business operations as a debtor in possession, and is subject to the oversight and jurisdiction of the court, while in Chapter 7, the business ceases operations, a trustee sells all of its assets, and then distributes the proceeds to its creditors.

The company’s president and chief executive, Brian J. Driscoll, said in a statement Hostess were optimistic about the future.

“We remain hopeful that we can reach an agreement that will allow us to amend our labor contracts so that we can emerge from Chapter 11 as a highly competitive company that provides secure jobs for our employees,” the

“With generations of loyal consumers, numerous iconic products and a talented and experienced workforce, Hostess Brands has tremendous inherent strengths to build upon.”

Its restructuring in 2209 was the result of the fluctuating price of flour and other necessary ingredients, but its bankruptcy could be the result of a shift in eating behaviour in the world’s fattest nation.

Over thirty percent of adults and 17 per cent of children in the US are medically obese and many more overweight, which has led to a new public perception of foods high in fat, sugar and salt.

There is a long-standing belief in the country that Twinkies can last forever, due to the amount of processing involved in its manufacture and storage, so drawing parallels between the attitude to junk food and Hostess’ financial troubles is not difficult.

Earlier this week, Food Magazine reported on the obesity crisis being the ‘new smoking’ in Western countries, as the negative health impacts including heart disease, diabetes and some cancers caused by excessive weight become common knowledge.

This year, it will become compulsory for fast food restaurants to display kilojoule informtation on menus and after much debate over the pros and cons of the traffic light nutritional labelling, the federal government announced in December it will be implementing a simple, mandatory, front-of pack labelling system in the next two years.

Industry has recommended junk food advertisements aimed at children be disallowed in Australia, but medical professionals are calling for a law to be passed banning the practice.

As consumers become more informed about the benefits of healthy lifestyles, and how to identify and avoid harmful additives, it would not be surprising if more junk food companies follow in the footsteps of Hostess in coming years.

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