Hostess, the maker of the iconic Twinkie, declared bankruptcy on January 11, 2012.On November 12, 2012, Hostess shut down its operations.In March, 2013, Apollo Global Management and Metropoulos & Co bought the rights to many Hostess brand names for $410 million, invested more than $150 million in the business, and subsequently reintroduced the Twinkie.I would like you to explain why the bankruptcy and subsequent sale made economic sense.I realize that Apollo made some wise improvements to operations, recipe, and strategy, but this is not what interests me.What interests me is why the old owners didn't make these same changes?Clearly Twinkie and other Hostess brands are very valuable; this episode seems like a battle over who gets to reap the rewards of the brands.Why was it necessary for Hostess to go out of business before it could make the sale?In particular I want you to use one of the models taught in class to explain this bankruptcy episode. (10)

Here are two links that you might find useful:

http://en.wikipedia.org/wiki/Twinkie

http://www.forbes.com/sites/stevenbertoni/2015/04/15/twinkie-billion-dollar-comeback-hostess-metropoulos-apollo-jhawar/