Less than one week after ceasing operations, Crumbs Bake Shop has unveiled a Chapter 11 bankruptcy plan that includes a prearranged sale to a group fronted by celebrity investor Marcus Lemonis.
Lemonis Fischer Acquisition Company is a joint venture between Marcus Lemonis LLC and Fischer Enterprises LLC. The group has provided pre-petition secured financing to Crumbs and has committed to provide debtor-in-possession financing, pending approval of the United States Bankruptcy Court.
Under terms of the agreement, Lemonis Fischer Acquisition Company would acquire substantially all of Crumbs’ assets. The New York-based specialty cupcake chain’s unit count had dwindled from 65 locations in 12 states to about 48 units when it said last week it would cease operations and pursue bankruptcy protection.
After beginning with one unit in 2003 in New York, Crumbs grew to 34 locations in 2011, and was acquired for $66 million and taken public by 57th Street General Acquisition Corp.
Earlier this month, Crumbs was delisted from the Nasdaq stock exchange, triggering a default on nearly $15 million in secured and unsecured financing.
“We are very pleased to have reached this agreement with Lemonis and Fischer after carefully evaluating opportunities to strengthen Crumbs’ financial position in order to ensure a strong future for Crumbs’ brand and business,” chief executive Edward Slezak said in a statement.
“The steps we are taking today will allow us to continue to execute our business strategy, expand our licensing business, and position ourselves to move toward a franchise store model. We remain saddened that we were forced to cease operations before this agreement was reached, but we strongly believe that pursuing this sale through the Chapter 11 process is ultimately in the best interest of the company and its stakeholders.”
Marcus Lemonis is chief executive of Camping World and Good Sam Enterprises, and hosts “The Profit” on CNBC. Among his eponymous company’s holdings are more than a dozen food brands, including Key West Key Lime Pie Co., Wicked Good Cupcakes and Little Miss Baker Specialty Bakers.
“I truly believe in the Crumbs brand and am excited to help the company enter into a new chapter in its history,” he said in a statement. “I think there is a tremendous opportunity to expand the Crumbs offering, building on the company’s growth strategy, and to leverage the synergies between Crumbs and other companies in my and the Fischers’ portfolio.”
Oklahoma City-based Fischer Enterprises LLC is the owner and franchisor of the Dippin’ Dots chain, which earlier this month acquired the Doc Popcorn franchise brand. Each specialty brand has one corporate location, and there 120 Dippin’ Dots locations and 90 Doc Popcorn units spread across the United States and several foreign markets.
This past January, Fischer had committed $5 million to Crumbs Bake Shop Inc. in a senior secured credit facility.
“Fischer Enterprises is excited to partner with Marcus Lemonis in the next phase of its evolving relationship with Crumbs,” Scott Fischer, chief operating officer of Fischer Enterprises, said in a statement. “We strongly feel that the team we’ve put together has the business experience and industry know-how to improve Crumbs’ product mix, broaden its consumer appeal and make the company a profitable business concern going forward.”
The companies said in their press release that Crumbs aims to reopen select locations or open new stores in the future, as well as continue progress Crumbs had made in its franchising strategy and its licensing business. The brand will also explore new products for retail sale, including Crumbs bake mix, bakeware, coffee and gourmet popcorn.
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