The New York-based cupcake chain store, Crumbs, has been forced to shut down all of its stores due to dwindling sales. The company plans to file for Chapter 7 bankruptcy while liquidating all of its assets. In a public statement, a spokesperson stated that the company would be ceasing all operations and attending to the dislocation of employees. According to reports from last year, Crumbs stores employed 655 part-time workers and 165 full-time workers.
In 2003, Crumbs began selling large cupcakes in flavors like Girl Scouts Thin Mints and Cookie Dough. The company went public in 2011 and expanded to 65 stores in 12 states and Washington, D.C., before going bankrupt. Employees were reportedly told of the upcoming closure on July 7, and it is unclear how many stores were still open on the company’s last day.
According to reports, Crumbs officers knew the company would probably have to file for bankruptcy last May. The company reportedly notified the Securities and Exchange Commission in a recent filing that it would be forced to curtail or cease activities if there was insufficient cash flow being generated. During the first three months of last year, the company reported a $2 million loss. The same period this year saw Crumbs lose $3.8 million, according to reports filed by the company with the Securities and Exchange Commission.
When a business is no longer profitable, a Chapter 11 reorganization may not be possible, leaving filing for Chapter 7 bankruptcy as the only alternative. Before making a decision about what form of debt relief is viable, many business owners choose to discuss their particular situation with an attorney who is experienced in bankruptcy law.
Source: ABC 13, “Crumbs Crumbles: Cupcake store chain shuts down“, July 08, 2014