Free Essay


In: Business and Management

Submitted By lynnaer123
Words 907
Pages 4
Case 5

Debt Financing and Bankruptcy

Lynna Revard

Trident University


The purpose of this paper is to go into detail and explain the different aspects of debt financing, bankruptcy, and the outcome of Hostess Brand Inc., filing for bankruptcy. It will go into detail of what debt financing is how to avoid different aspects of it. I will also go into detail and explain not only the history of bankruptcy, but also the different chapters of bankruptcy and how each one differs from the other. You will read about things that you might already know and hopefully by the end of this paper I am able to teach some things that you were possibly not aware of.

Main Body

Hostess Brands Inc. and its beloved bread and snack cake products date back to the late 1800s. Its brands are some of the best known snacks and breads in the United States. They make many of the top-selling snack cakes in convenience stores, including Twinkies®, CupCakes and Fruit Pies. Before becoming Hostess Brand Inc., the company was known by many names. Interstate Bakeries Corporation, Holsum Bakeries, Bakers Inn, Hostess Bakeries, and Hostess just to name a few. Effective November 2, 2009, the company was renamed Hostess Brands, Inc. after the cake division that featured Twinkies and Cupcakes although it continues its bread line including Wonder Bread. It has been a very successfully company since it started its productions however; in 2004 the company had to file for bankruptcy and again in 2012.

The recent file for bankruptcy by the company, from what they said “is stated to be due to the company said it "is not competitive, primarily due to legacy pension and medical benefit obligations and restrictive work rules." Hostess Brands Inc. filed for Chapter 11 bankruptcy protection in efforts to confront burdensome debt and labor costs that the company has been fighting for so long. Chapter 11 bankruptcy was filed due to it being a chapter of the United States Bankruptcy Code which permits reorganization under the bankruptcy laws of the United States.

Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most significantly used by corporate entities. In compared, Chapter 7 governs the process of a liquidation bankruptcy, while Chapter13 provides a reorganization process for the majority of private individuals. When a business is unable to facilitate its debt or pay its creditors, the business or its creditors can file a federal bankruptcy court for protection under either Chapter 7 or Chapter 11. Chapter 11 also holds many of the features present in all, or most, bankruptcy proceedings in the U.S. it provides additional tools for debtors as well. It presents the debtor in possession a number of mechanisms to restructure its business. A debtor in ownership can acquire financing and loans on promising terms by giving new lenders first priority on the business’ earnings.

When filing for bankruptcy, there are numerous different Chapters that can be chosen from. Bankruptcy has Chapters 7, 9, 11, 12, 13, and 15. In choosing Chapter 7, debtors give up their non-exempt property to a bankruptcy trustee who will then turn around and liquidate the property and distribute the proceeds from that property the unsecured creditors of the debtor. The amount of property that debtor is able to exempt varies from state to state. For anyone to be eligible for a Chapter 7, they have to go through a process that is known as the means test that will determine the eligibility of the individual.

In bankruptcy, Chapter 9 is designed more for the cities or boroughs. Chapter 9 has a number of unique characteristics. Because municipalities are objects of State governments, the power of Congress to adjust their debts through bankruptcy is limited considerably by the 10th and 11th Amendments.

Chapter 12 is a chapter in the bankruptcy code that is designed for more of the farmers and fisherman. The chapter states that it was intended as an emergency response to tightening agricultural credit in the early and mid-1980s, in the middle of a number of notable bank failures. The 1898 Bankruptcy Act contained no special provisions, with one exception that farmers were immune from an involuntary bankruptcy petition.


As explained above, all bankruptcy chapters have been designed to not only accomplish something different but also to help the debtor accomplish what it is they are trying to accomplish when they have reached the point of filing for bankruptcy. It makes it easier for the debtor and for the creditor as well as they each have different areas and rules that come with each chapter allowing the debtor and the creditor to come to an understanding or agreement of what is about to happen.


Palank, Jacqueline (January 12, 2012). "Twinkies Maker Hostess Files for Chapter 11". Retrieved 2012-01-12.

Agricultural Finance and Credit, Jonathan M. Bishoff, Nova Publishers, 2008, ISBN 160456072X, 9781604560725, page 91-92.

Epstein, David G. 2002. Bankruptcy and Related Law in a Nutshell. St. Paul, Minn.: West Group.

Hubler, James T. 2002. "The End Justifies the Means: The Legal, Social, and Economic Justifications for Means Testing Under the Bankruptcy Reform Act of 2001." American University Law Review (October). wonder-bread/52495162/1…...

Similar Documents

Premium Essay


...individual assignment. Regarding the field of study, you can select your own choice from the 10 categories as listed in the attached document. Please be reminded about the submission deadline by 5 pm on November 26, 2010. A soft copy by email (to: is required for my assessment purposes as well as for the Turnitin Software (a plagiarism monitoring software). One last note, the written report should be about 1,500 - 1,650 words. TSC -- T. S. Chan Associate Vice President and Shun Hing Chair Professor of Marketing Lingnan University, Tuen Mun, NT, Hong Kong Chapter Chair, Southeast Asia Region, Academy of International Business Phone: 852-2616-8302 Fax: 852-2572-4484 BUS205 Marketing Management Individual Written Assignment First Term, 2010-11 To demonstrate students’ ability to apply their learning in marketing, each student will prepare a marketing analysis and develop a marketing plan for a real brand or company in Hong Kong in the next five years. Students are required to collect information and materials from various sources (e.g. library, electronic data bases, Internet search engines, newspapers and magazines etc.) related to the chosen brand or company. The student will then apply the relevant marketing concepts and framework to analyze the market situation facing the brand/company chosen; identify the problems or opportunities for the brand/company; define the mission and the......

Words: 742 - Pages: 3

Premium Essay


...Chapter 1 - Management Communication in Transition Management communication is the central skill in the global workplace of 21 century. An understanding of language and its inherent powers, combined with the skill of speak, write, listen, and form interpersonal relationship, will determine whether you will succeed as a manager. Three issues: the use of rhetoric to achieve a manager's goal; the shaping of managerial identity, and taking action to achieve the goal of the organization that employ us. The essence of what management is all about the effective use of language to get their done. - The Roles Mangers Play: Interpersonal roles: figurehead, leader, liaison. Informational roles: monitors, disseminator, spokesperson. Decisional roles: entrepreneur, disturbance or crisis handler, resource allocator, negotiator. - Major Characteristics: Time is fragmented, values compete and the various roles are in tension, the job is overloaded, efficiency is a core skill. - What varies? Emphasis: the entrepreneur role is gaining importance, so is leader role, managers must create a local vision as they help people grow: explaining in practical and understandable terms what your organization or unit is all about and how the work of your employees fits into the larger picture. - Management Skills Required: technical skills(most valuable at the entry level but less valuable at more senior levels), relating skill(are valuable across the managerial career span and are more likely......

Words: 282 - Pages: 2

Premium Essay

Nike Erp at the University of Oregon in search of a competitive edge for his athletes, a competitive edge which could be achieved by spearheading changes to the running shoes of the time. At the time, Adidas and Puma were the dominant brands of running shoes. Phil Knight, a Portland runner with a degree in finance from Stanford University, proposed to compete with the German (Adidas and Puma) brands of running shoes by manufacturing them in Japan, which at the time was experiencing a post WWII boon in its economy, and their stage of manufacturing development was at a point where the focus was on copying established American and European products at a lower cost, relying on cheap labor and foreign economic stimulus in the Frances J. Rey Bus205 form of loans and capital investments to power their economy. Before starting Nike, Phil Knight was a distributor for Tiger running shoes. He knew of Bill Bowerman’s reputation as a nationally respected track coach and approached him on becoming the supplier of Tiger track shoes for the University of Oregon track team. Bowerman shocked Knight by instead telling him of his own running shoe designs and proposing a partnership with Knight, where his running shoe designs would be provided to Tiger. Eventually they started a business together called Blue Ribbon Sports, which catered to Beaverton, OR running crowd, with Knight literally selling shoes out of the trunk of his car and Bowerton ripping apart the Tiger shoe designs in search......

Words: 2341 - Pages: 10

Premium Essay

Business Ethics

...Collins, J.P. (2005). Ecological Ethics: Building a New Tool Kit for Ecologists and Biodiversity Managers. Conservation Biology, 19(6), 1803-1812. doi:10.1111/j.1523-1739.2005.00281.x Merriam-Webster. (2015). Right [Data file]. Retrieved from Merriam-Webster. (2015). Utilitarianism [Data file]. Retrieved from PBS. (2015). Dred Scott case: the Supreme Court decision [Data file]. Retrieved from Saylor Academy. (2015). Immanuel Kant’s ethical theory – rights and duties – Dr. Dave Yount, Mesa Community College [Data file]. Stanford Encyclopedia of Philosophy. (2015). Environmental ethics [Data file]. Retrieved from Stanford Encyclopedia of Philosophy. (2015). Locke’s political philosophy [Data file]. Retrieved from University of Rhode Island. (2015). Jeremy Bentham – an introduction to the principles and morals of legislation (1789) [Data file]. Retrieved from

Words: 2383 - Pages: 10

Premium Essay

Ethics Assignment

...universal law, the formula of the end in itself, and the formula of universal acceptability (Yount, n.d.). If the actions fail one or more of these tests, they should be avoided. In this essay, I am going to use Kant’s deontology principals to argue and to find out the solutions of the case of the confectionary company. The main issue in this case is that the children do not experience pleasure in their childhood. BIBLIOGRAPHY (2014). Duty-based ethics. [online] Available at: [Accessed 9 Jul. 2016]. Yount, D. (n.d.). IMMANUEL KANT’S ETHICAL THEORY RIGHTS AND DUTIES. [online] Available at: [Accessed 9 Jul. 2016]....

Words: 287 - Pages: 2