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Bankrupt snack cake maker Hostess has chosen a lead bid for selling off the rights to its iconic snack cakes. According to a statement issued by the company, it has accepted a joint offer from investment firms Metropoulos & Co. and Apollo Global Management LLC. The two companies have placed a $410 million bid for Hostess’s snack cake business and five bakeries.
The bid is known as a “stalking horse bid,” which is an initial bid from a potential buyer on a bankrupt company’s assets. The company chooses which bid it accepts first from a pool of bidders. This method allows a financially troubled company to avoid low bids on its assets, and sets a bench mark for other potential buyers to bid against. Any final sale will have to be approved by the bankruptcy court.
In its most recent spate of financial difficulties, Hostess filed for Chapter 11 bankruptcy on January 10, 2012. After failed labor negotiations, the company ceased all operations on November 16th of last year, and stated that it intended to sell off its assets to the highest bidders. The company has also received another stalking bid for six of its bread brands, which was valued at $390 million. A final auction for those brands is set for February 28, 2013.
Chapter 11 bankruptcy is a type of reorganization bankruptcy available under the United States bankruptcy code for businesses and individuals. It allows a business to continue operations as a debtor-in-possession while restructuring its debts in order to return the company to profitability. It allows companies to raise investment capital on favorable terms by giving creditors a priority interest in business earnings. In addition, like other forms of bankruptcy, Chapter 11 protects the filer from any collection attempts or litigation to collect on debts through the automatic stay.
If you are experiencing financial difficulty, bankruptcy may be an option to consider. Bankruptcy can reduce or discharge debts and provides a financial fresh start. To determine whether bankruptcy could benefit you, you should have your case reviewed by an experienced St. Louis bankruptcy attorney. The Westbrook Law Group practices exclusively in the area of bankruptcy law and is has helped hundreds of clients regain their financial footing through bankruptcy. To schedule a free consultation with one of our experienced bankruptcy attorneys, contact us today at (636) 493-9231. If you would like to email us, please fill out the contact form on the right side of the screen and we will be in touch with you soon.