Getting a cupcake along the East Coast may be harder now that Crumbs is closing. As many New Hampshire residents may know, the cupcake retailer has curtailed operations after it lost its listing on Nasdaq at the beginning of the month.
Crumbs had around 165 employees who were classified as full-time and approximately 655 part-time workers when 2013 concluded. Crumbs closed about 65 stores located in a dozen states. Employees were notified on July 7, although the exact number of employees remaining on that day is uncertain, according to management.
Crumbs opened its first shop in 2003, selling cupcakes in a variety of flavors and sizes including Girl Scouts Thin Mints. The company offered shares to the public in 2011, but a decrease in sales led to a $2 million loss in 2013, and a deficit of $3.8 million was reported on March 31. In May, Crumbs Bake Shop formally notified the Securities and Exchange Commission that, if it did not increase cash flow, it would stop operations in all remaining stores. In a public statement, the company said it would evaluate options open to it, and Chapter 7 bankruptcy liquidation is included.
Under Chapter 7 business bankruptcy, a company such as Crumbs may shut down and liquidate assets to pay their debt. Another type of bankruptcy open to businesses is Chapter 11 where a business sets up a plan to reorganize their debt, possibly liquidating some assets to do so. This allows a company to remain in business while they pursue and enter into bankruptcy. An attorney may work with a business to evaluate their debt and cash flow. They may help the business choose a way to pay off debt using the form of bankruptcy that best suits their needs and vision for the future.
Source: ABC 13, “Crumbs Crumbles: Cupcake store chain shuts down“, July 08, 2014
