Twinkie maker Interstate Bakeries Corp. on Monday delayed filing its annual report for the second time, a move that dragged shares lower by more than 42 percent on speculation about the company's ongoing viability.

The bakery giant delayed filing its annual 10-K form with the Securities and Exchange Commission after missing an Aug. 27 filing extension deadline. Interstate listed a number of reasons for the delay, and said a review by auditors could show "there may be substantial doubt about the company's ability to continue as a going concern."

In order to stave off deeper financial problems, Interstate has hired turnaround firm Alvarez & Marsal, a global company that specializes in crisis management and creditor advisory. Among the company's biggest concerns is not being able to file its annual report in enough time to keep bondholders satisfied, so Interstate has already contacted banks that manage its senior secured credit facility and plans to begin speaking with investors.

"There is some possibility Interstate Bakeries could have to enter Chapter 11," Credit Suisse First Boston's David Nelson said in a report. "We continue to believe that neither Interstate's lenders nor their unions want to own baking plants but that possibility exists."

Interstate would not comment about the possibility of seeking bankruptcy protection beyond a statement already released.

The company said it delayed filing the report in part because of problems with data entry into a new financial reporting system that was installed June 1. Interstate said it is also uncertain about anticipated fiscal 2005 first-quarter results because of the new reporting system, and disclosed that it might not comply with debt covenants because of the delay.

Interstate had previously obtained an extension to filing its annual report because of delays arising from investigations into the way the company set its workers' compensation and other reserves. The company later took a $40 million charge regarding those costs.

Interstate now has until Sept. 26 to file its annual report in order to not trip a number of agreements with investors. If it misses the deadline, or if auditors raise "going concern" questions, the company might not be able to borrow any further under its senior secured credit facility. Further, missing the next deadline could force bondholders to demand accelerated repayment as part of default agreements.

On Aug. 12, the company privately placed $100 million of 10-year, 6 percent senior subordinated convertible notes with institutional buyers. The debt is not rated by the major credit rating agencies.

The problems at Interstate come at a time when the company has already seen shares drop significantly as consumers began to jump on the low-carbohydrate bandwagon. Besides Hostess Twinkies, Interstate manages a number of other well-known brands including Wonder Bread, Dolly Madison, Marie Callender's and Mrs. Cubbison's.

Shares of Interstate Bakeries fell $3.34 to close at $4.56 during the regular session on the New York Stock Exchange, a new all-time low for the company. However, shares rebounded slightly in after-hours trading to $4.75, up 19 cents, or 4.2 percent.

Interstate has seen its stock slide significantly from its 52-week high of $16.88 posted in March. Most of that drop has been pinned on analysts' criticism of the company's business plan and the bakery giant's own internal problems.