Some Kentucky residents may be familiar with Crumbs Bake Shop, a cupcake shop that until recently operated 65 locations in 12 states according to its website. The company was founded in New York City in 2003, but has been experiencing declining sales in the last few years, including a loss of $3.8 million in the first three months of 2014. A week after it was delisted from NASDAQ, the company has announced that it will be ceasing all operations and filing for Chapter 7 bankruptcy.
Sources report that Crumbs previously advised the Securities and Exchange Commission that it may be forced to close down if revenue did not improve. Employees have reportedly been notified of the closure, though a representative with Crumbs could not say how many would be affected. The company released a statement confirming the closure and stating that it is continuing to evaluate what options remain available to it. Crumbs became a publicly-traded company in 2011 and listed approximately 655 part-time and 165 full-time employees as of the end of 2013.
Despite the stigma often associated with filing for Chapter 7, it is sometimes the only way for an individual or business to find debt relief. If a business is struggling with overwhelming debt, it may be helpful to consult with an attorney to ascertain whether bankruptcy is the appropriate course of action.
Chapter 7 requires a business to liquidate and cease operations. In some cases, however, a business can choose a Chapter 11 reorganization that will allow it to remain in operation while it tries to restructure its obligations.
Source: ABC 13, “Crumbs Crumbles: Cupcake chain shuts down“, July 08, 2014