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John Penn in the Dallas Business Journal: Hostess' Chapter 11 bankruptcy filing reflects labor issues
The prolonged recession, labor issues, burdensome debt and lender fatigue combined to be a recipe for relapse into bankruptcy for Irving-based Hostess Brands Inc., Dallas-Fort Worth area bankruptcy attorneys said.
Hostess, the maker of Twinkies and Wonder Bread, filed Wednesday for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court U.S. Bankruptcy Court in the Southern District of New York.
“You’re starting to see some higher-profile filings,” said John Penn, a partner in the Fort Worth office of Haynes and Boone LLP and a past president of the American Bankruptcy Institute. Companies such as Hostess are built for growth and will crumble — or at least struggle — without it, Penn said.
“If they’re not growing, or worse, if they’re shrinking, you start to have cash flow and other issues,” he said. “Lender fatigue” sets in and lenders stop renewing debt or encourage borrowers to refinance or move their debt, Penn said.
Excerpt from the Dallas Business Journal, Jan. 13, 2012. To view the full article, click here (subscription required).