Twinkie Maker Hostess Brands Going Bankrupt. Retired Workers and Health-Care Costs Suffocating Business.

Iconic North American snack producer Hostess Brands is filing for bankruptcy protection. The maker of Twinkie and a plethora of other sugary and salty junk food is blaming three things for its failure to turn a profit:

1. Pension obligations from retired workers.
2. Health-care costs for both retired and current employees.
3. Tough economic conditions.

It was only two years ago that Hostess emerged from bankruptcy court, and private investors had hoped to turn the company around. Its major hurdle is the pension fund, which is owes more than $944 million.

Currently, the company is trying to negotiate its pension and medical benefits with its union membership, as the overwhelming obligations simply make the company uncompetitive with Pepsi-Co and its Frito-Lay subsidiary.

The company will maintain production and sales throughout the restructuring process, but any further expansion is out of the question. Surely, consolidation will be in order, and perhaps be a boon for Pepsi (NYSE: PEP).