Judge Michael Kaplan of the United States Bankruptcy Court in Newark, New Jersey, recently approved the sale of Crumbs Bake Shop, Inc. to Dippin’ Dots owner Fischer Enterprises and its partner, TV star and financial investor Marcus Lemonis. The new owners will take over Crumbs in exchange for the cancellation of approximately $6.5 million in debt. As a result, the Crumbs chain will be expanded beyond its signature cupcakes.
Crumbs, founded by husband and wife, Jason and Mia Bauer in 2003, took off with its first retail store on New York City’s Upper West Side. The company became known for its four-inch, frosting-topped cupcakes in flavors such as cookie dough, caramel macchiato, and red velvet, usually costing between $3.50 and $4.50 each. After a sale to new corporate owners and a rapid expansion to the number of its retail locations in many States, the company went public in 2011. After several years of losses, a dwindling cash supply, and a food craze that began to wane in the face of many imitators and the loss of its initial excitement, the financial outlook looked dreary for Crumbs.
When it entered into bankruptcy, Crumbs searched for a buyer. There was interest expressed by thirteen potential purchasers in the Bankruptcy process, but only the Fischer-Lemonis group put in a formal offer. Crumbs planned to hold an auction, but it was cancelled for a lack of interest.
Many of the Crumbs’ Northeast locations will remain closed because the company will focus instead on about two dozen locations in New York, Los Angeles, Chicago, Boston, and Washington, D.C. The new Crumbs stores will continue to sell its famous cupcakes, but will now also incorporate the sale of other food brands, including Dippin’ Dots ice cream treats and other food products, some of which are associated with products sold by the new owners.
“The court is pleased to see there will be employees going back to work, and that there will be certain landlords with continuing tenants,” said Judge Kaplan, after granting the approval, ending the company’s Chapter 11 bankruptcy case.
Unfortunately, many of the former landlords and general unsecured creditors will suffer a financial loss from the Crumbs bankruptcy, but that’s the way the cupcake crumbles.
Image credit: Pixabay