Hostess Brands Inc., the maker of Twinkie snack cakes, filed its plan for reorganization under U.S. bankruptcy law that may give existing equity holders no return on their investment.
The largest equity owners, “after making over $150 million in equity and debt investments into the debtors since 2009, including $40 million invested in 2011, will suffer a complete loss and receive nothing on account of these investments,” according to court papers.
“The plan sets forth the blueprint for Hostess to emerge from bankruptcy,” Gregory F. Rayburn, the company’s chief executive officer, said in a statement.
Under the proposed plan, unsecured creditors with claims of $2 billion to $2.5 billion will receive no recovery.
Hostess filed for bankruptcy in January, blaming high labor costs.
The case is In re Hostess Brands Inc., 12-22052, U.S. Bankruptcy Court, Southern District of New York (White Plains).