Crumbs files for bankruptcy
Crumbs Bake Shop Inc., a New York-based cupcake specialty store chain known for its innovative and oversized gourmet cupcakes, reached an agreement with Lemonis Fischer Acquisition Co. LLC, a joint venture created by Marcus Lemonis LLC and Fischer Enterprises LLC, which is providing pre-petition secured financing for Crumbs’ voluntary Chapter 11 bankruptcy petition. The cupcake maker filed the petition in the U.S. Bankruptcy Court for the District of New Jersey on July 11. It closed all its stores on July 8.
Lemonis Fischer Acquisition Co. has also committed to provide debtor-in-possession (DIP) financing, subject to court approval, and has entered into an asset purchase agreement for the initial stalking horse bid in the court-supervised auction process. Under the terms of the agreement, Lemonis Fischer Acquisition Co. would acquire substantially all of Crumbs’ assets. Fischer Enterprises had previously provided Crumbs with a $5 million senior secured credit facility. The company hopes to complete the sale process in approximately 60 days, pending receipt of the necessary approvals from the Bankruptcy Court.
“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 the Crumbs brand and business,” says Edward M. Slezak, Crumbs CEO and general counsel. “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.”
Lemonis Fischer Acquisition Co. and Crumbs will evaluate the retail strategy with the goal of reopening select locations or opening new locations in the future. Additionally, Slezak will remain with the company throughout the process in order to ensure a smooth emergence and transition.