As Jill V. mentioned the other day, Hostess, makers of Ding-Dongs, Ho-Hos, and assorted other guilty pleasures, filed for bankruptcy recently.  The case is pending in the Bankruptcy Court for the Southern District of New York, under Docket numbers 7:12-bk-22051 through 22056. Hostess previously declared bankruptcy in 2004, in the Western District of Missouri.  The Docket number for that case was 4:04-bk-45814.

But even that prior bankruptcy wasn’t the first time Hostess made front page legal news.  That distinction goes to the so-called Twinkie Defense.  This is the mildly derogatory term applied to former San Francisco Supervisor Dan White’s defense when tried for the double murder of Mayor George Moscone and Supervisor Harvey Milk (some of the essential facts of the case can be found at 117 Cal. App. 3d 270).   Contrary to popular memory, Mr. White did not argue that eating a Twinkie had caused him to commit murder; he actually argued that he suffered from severe depression, which prevented him forming the requisite mens rea for homicide; his consumption of junk food was introduced merely as a symptom.  See footnote 204 in 36 USFLR 261.

The Twinkie Defense had a direct impact on California law when the legislature chose to amend Cal. Penal Code § 28 to abolish the Diminished Capacity defense and replace it with the slightly different ‘Diminished actuality’ defense.  The literal impact of this change can be found in the annotations to the current Penal Code § 28.  While Westlaw doesn’t have legislative history from California for 1982, a search for, diminished /3 capacity /p diminished /3 actual!, in the JLR database reveals 17 articles, which do a pretty good job discussing the motivation behind the change.

The Twinkie Defense had a brief return to the spotlight in 2006, when Justice Scalia mentioned it at oral argument in the case of U.S. v. Gonzalez-Lopez, ostensibly as an example of the kind of innovative thinking a good defense lawyer can do.  Less often mentioned was Scalia’s next sentence, “I would not consider the Twinkie defense an invention of a competent lawyer.” The transcript is available at 2006 WL 1134467.

For a sense of what people thought of the Twinkie Defense at the time, you can run the search, twinkie /1 defense & da(bef 1/1/1984) in ALLNEWS (11 results).  For more on Hostess’s ongoing financial troubles, try, hostess /s bankruptcy & da(aft 1/1/2004) in the same place.  And while I wish it had been me, credit for the first Bankruptcy/Twinkie defense connection must go the Editorial Board at the Hartford Courant, as revealed by simply combining the last two searches into HOSTESS /S BANKRUPTCY & TWINKIE /3 DEFENSE.

Reports came out on Wednesday morning that Hostess had filed for bankruptcy in the Southern District of New York. So on my lunch break (eating a salad, sans Twinkie…maybe I’m part of the problem?), I tracked down the docket on WestlawNext. Here are directions for browsing to the Hostess bankruptcy on WestlawNext:

First,  click on the Dockets link from the Browse All tab on the Home page of WestlawNext.

Next,  click on the link to Federal Bankruptcy Courts.

Then, under the State category, I clicked on New York… after that, the link to the Southern District.

That brings up a nice template for us to use. I simply enter “Hostess” in the “Participant Name” box, then use the “Filing Date” box to choose “last 30 days.”

That brings up the dockets related to the Hostess bankruptcy.

Images of the complaints are already available from the docket, along with several other filings.

Last Week, Meredith Whitney (“The Woman Who Called Wall Street’s Meltdown”) suggested on 60-Minutes that U.S. municipalities – loaded with debt and suffering from anemic revenue streams – could begin defaulting in record numbers during 2011.

This week, we learn of Hamtramck, Michigan.  This small town believes it may not be able to meet its obligations (debt, pension payments, city services) beyond March 1.  After that?  The city has been asking the state for permission to declare bankruptcy.  The Hamtramck city manager says:

“The state is concerned that if they yes to one, if that door is opened, they’ll have 30 more cities right behind us…But anything else is just a stop gap.  We’re going to continue to pursue bankruptcy until the door is shut, locked, barricaded, bolted.”

Just how does a municipality declare bankruptcy?  Chapter 9.

Research References

See chapter 90 of Norton’s Bankruptcy Law and Practice (NRTN-BLP).

For an interesting explanation of a Chapter 9 framework, see American Bankruptcy Institute Journal’s The Next Chapter for Municipal Bankruptcy, 29-JUN Am. Bankr. Inst. J. 14. (To pull the article, we searched Journals and Law Reviews (JLR) for ti(municipal! city town county /2 bankrup! insolven!).)

For filings, try starting with flt(9) in the bkr-all database. FLT = filing type.

It is worth noting that Whitney’s forecast of hundreds of billions of dollars worth of defaults has been roundly criticized as being overstated by many other market commentators.

With the New Year approaching though, we will soon know if Ms. Whitney should more aptly be referred to as Cassandra or simply be deemed to have jumped the shark.

Happy 2011!