Hostess Taps New CEO to Guide Company Through Bankruptcy Filing
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Hostess Taps New CEO to Guide Company Through Bankruptcy Filing

March 19, 2012

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After filing for bankruptcy several weeks ago, Hostess Brands Inc. has hired a new CEO to help guide the company through its Chapter 11 reorganization, according to a report from the Worcester Telegram & Gazette.

Sources indicate that Gregory F. Rayburn will immediately replace the ousted Brian Driscoll as the chief executive for Hostess, which is the producer of iconic snacks such as Twinkies, Ding Dongs, and Wonder Bread.

The 53-year-old Rayburn joined Hostess last month as its "chief restructuring officer" and reportedly has developed a reputation over his long career as sort of financial medic for companies needing emergency debt relief.

Rayburn, for example, served as the chief restructuring officer for WorldCom when that company filed what was, at the time, the largest bankruptcy filing in U.S. history.

A major part of Rayburn’s duties while the company goes through bankruptcy is negotiating a new collective bargaining agreement with the employees’ union. Hostess is looking to reduce its pension and wage obligations in order to reduce overhead costs that threaten to cripple the company.

These negotiations, however, may prove to be tense, although the Teamster Union for Hostess workers recently issued a statement saying that it would continue to negotiate with Rayburn, despite the fact that his appointment as CEO was “unexpected.”

The company, though, may have no choice but to trim its labor costs, given its extensive history in bankruptcy court. In 2004, the company that was essentially the predecessor to Hostess Brands filed for bankruptcy.

This corporation, which was named Interstate Bakeries, quickly changed its name to Hostess Brands in after filing for bankruptcy. Alas, the name change did not prove beneficial in resurrecting the struggling company, and some experts believe several factors show that Hostess Brands may never be able to recapture the magic of its golden years.

First, the company’s 19,000 employees are all unionized, which means Hostess has higher medical benefit and pension costs than its competitors. In addition, Americans are increasingly wary of unhealthy snacks, especially as the country’s rates of obesity and diabetes continue to climb.

In order to survive past its second bankruptcy, Hostess may have to completely alter the way it does business. Soy vegan Twinkies, anyone?

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