Twinkies Go Bankrupt!!!

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Twinkies Baker Runs Out of Dough for Creditors

Interstate Bakeries Hurt By Decreased Demand for Baked Goods

KANSAS CITY, Mo. (Sept. 22) - Interstate Bakeries Corp., the nation's largest

wholesaler baker whose products include Twinkies and Wonder Bread, filed for

Chapter 11 bankruptcy protection early Wednesday. The company also named a new

chief executive.

The electronic filing, made shortly after midnight with the U.S. Bankruptcy

Court for the Western District of Missouri in Kansas City, listed assets of

$1.626 billion and liabilities of $1.321 billion.

Interstate, along with other food companies, has been hurt by decreased

demand for bread and pastries due to the popularity of low-carbohydrate diets.

" This is a business that has been in steady decline for the last eight years

and they sometimes blame Atkins or blame other consumer trends, " said Janney Mo

ntgomery analyst Pinheiro. " But the bottom line is that this

company hasn't innovated ... and when they have innovated they've generally

been one step late. "

The company said it had a commitment, subject to bankruptcy court approval,

from JP Chase Bank to provide $200 million to pay suppliers, employees

and other operating costs during the reorganization. It said it would continue

operating its bakeries, outlet stores and distribution centers.

R. Elsesser, who had been chairman and chief executive officer,

resigned both positions effective Wednesday, and the board named Tony Alvarez as

CEO,

with Suckow to be chief restructuring officer. Both are with Alvarez &

Marsal, a turnaround management firm founded and headed by Alvarez.

Leo Benatar, a member of the board, was elected to be the non-executive

chairman.

''IBC has some of the most recognizable and popular baked breads and sweet

goods brands in the nation,'' Alvarez said in a statement. ''By filing for

protection under Chapter 11 and obtaining...financing, the company should have

the

liquidity, time and resources necessary to thoroughly identify, assess and

address the issues that will enable this company to be successful in the

future.''

Last month the company missed a second deadline for filing its annual report,

after request an extension in May because of a series of investigations into

its reserve fund for workers' compensation claims.

The report was due Aug. 27, but the company said it was still not finished

because of problems with a financial system it started using in June,

uncertainty over results for the current quarter, and questions about its

ability to pay

its loans this year.

It also said there was a possibility that auditors would include a paragraph

in the report saying ''there may be substantial doubt about the company's

ability to continue as a going concern.''

Interstate, with annual sales of $3.5 billion, operates more than 50 bakeries

and employs about 34,000, including 600 of them in the Kansas City area.

The company's shares closed at $3.27 on the New York Stock Exchange Tuesday,

down 13 cents.

A call Wednesday morning to Mark Dirkes, vice president for corporate

marketing and the company spokesman, was not immediately returned.

09-22-04 12:28 EDT