Crumbs Cupcakes – Still In The Running
August 12, 2014
Despite all the negative reports, it appears the popular gourmet cupcakes chain Crumbs Bake Shop may not be permanently closing its doors after all.
Several days after shutting down its remaining stores and indicating that it would file for Chapter 7 liquidation, Crumbs instead filed for protection under the reorganization provisions of Chapter 11 of the bankruptcy law, according to The Wall Street Journal. The chain will sell itself to an investor group that includes CNBC host Marcus Lemonis and Dippin’ Dots owner Fischer Enterprises. The group said that it plans to provide the ailing chain with financing to carry it through its time in bankruptcy court and then to acquire its assets in order to create a new, privately held company.
“The company has limited cash, and we are trying to come up with a situation that allows the company to remain viable,” Lemonis told The LA Times. “We are in the final stages of working on a plan to get the stores reopened and people rehired.”
Lemonis explained the investor group’s thinking, suggesting that Crumbs’ downfall was selling only one dessert, according to the news source. Under new leadership, the chain will offer other sweets and bulk up its coffee offering. His own Florida-based candy chain, Sweet Pete’s Candy, will join a number of other brands in being incorporated into the new Crumbs.
In one bit of good news for the investors, the company’s reported net sales in 2013 came to $47.2 million – up from 2012’s figure of $43 million, according to the Journal.
After news broke that Crumbs may be acquired by the investor group, the company’s stock shot back up 990 percent, from 3 cents to 35 cents, according to the LA Times.
The struggle for Crumbs to remain open, reminds me of another desert company that had bouts with bankruptcy. Check out my recent posts on Hostess, the company that brought you the Twinkie and the Ding Dong:
Hostess Brands Inc. Bankruptcy Posed Risk To Other Pensions
Judge Ordered Mediation Between Hostess and Union Fails
Hostess Seeks Court Order to Impose New Contract on Union