Bankruptcy May Save Your Twinkies

Hostess filed bankruptcy in January of 2012 and by November of 2012, it announced it would be closing its doors for good because it no longer had cash for operation.  However, in March of 2013, Apollo Global Management, LLC and Metropoulos & Co. paid $410 Million for Hostess, including all rights to its products.  The buyers renamed the company:  Hostess Brands, LLC and plans to reopen four bakeries this summer, including its eastern Kansas bakery hiring 250 people.  It is anticipated that products such as Twinkies and Ding Dongs will once again be produced and available for retail.

Although Hostess didn’t survive its bankruptcy, it also didn’t completely die.  The assets of the company were sold and thousands of workers stand to regain employment in the intervening months.  Other companies purchased other brands of Hostess, including Beefsteak brand of bread and Wonder Bread.  The question is, what would have happened if Hostess hadn’t filed bankruptcy.

One important aspect of bankruptcy is that assets of the estate are administered by the Bankruptcy Court.  This keeps creditors and employees who are owed pensions and wages, among other classes of claimants, on a fair playing field.  If Hostess hadn’t filed bankruptcy, it wouldn’t be under such scrutiny and it’s quite possible that the company would have sold off assets and applied the proceeds differently than what was mandated by the Court.  Although Hostess didn’t emerge from bankruptcy, the bankruptcy itself may have saved the Twinkie.

The Bankruptcy Estate

The Bankruptcy Estate is a very broad classification of “all legal or equitable interests of the debtor in property as of the commencement of the case”  11 U.S.C. 541(a)(1).  This means that property that is your own property either legally or property that you could have rights to under rules of equity is included in your “property,” which is subject to the administration of your assets in your case.  For example, your vehicle titled in your name is property of the bankruptcy estate.  Also included are rights to property such as the rights to sell story rights as found in the Casey Anthony bankruptcy case detailed here:

Fortunately, there are exemptions to keep the bankruptcy trustee from taking the property of your bankruptcy estate and selling it and distributing the proceeds to your creditors.  These exemptions, in Nebraska, are governed by state law.  Thus, one of the benefits you will receive by hiring an experienced bankruptcy attorney at Lepant & Lentz, PC, LLO, is the knowledge and experience in determining the allocations of your property exemptions to prevent you from losing the property that you have worked hard to acquire.

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