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New CEO takes reins at Hostess as it moves through bankruptcy

The Hostess brand is well-known in Chicago and across the country. At one time or another we have all eaten a slice of the company's bread or one of its many snacks. But times have not been so sweet for the baker recently. After filing for bankruptcy only a few years ago, it again sought the protection of Chapter 11 early this year.

The company appeared ready to move forward with experienced CEO Brian Driscoll. Driscoll had worked for other giants in the food industry and brought almost three decades of knowledge to Hostess when he joined the company nearly two years ago. But he left the position last week, leaving the company in the hands of Gregory Rayburn, who will now take over as CEO. Hostess had considered Driscoll essential to its plan to emerge stronger and leaner from bankruptcy. No reason was given for Driscoll's sudden resignation.

Like other businesses that seek to rescale operations through Chapter 11, Hostess has labored under significant debt from costs and pension contracts with its workers. Part of Rayburn's responsibility in bankruptcy will be to restructure its costs and increase revenues going forward. Rayburn has significant experience in business reorganizations and was serving as chief restructuring officer in the company before he was elevated to CEO.

The union that represents Hostess workers has indicated its commitment to negotiating with the company in an attempt to restructure workers' contracts. If the sides cannot reach an agreement, a trial over the contracts is slated to begin later this month.

Chapter 11 bankruptcy can provide struggling businesses with the opportunity to discharge debts, meet financial challenges and regain profitability.

Source: The Wall Street Journal, "Hostess Brands Names New CEO," Rachel Feintzeig, Mar. 9, 2012.

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