A Crumbs revival?

by Eric Schroeder
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Investor group led by Marcus Lemonis has agreed to acquire cupcake specialty store chain.

NEW YORK — Don’t count Crumbs Bake Shop out yet. Just a few days after the New York-based cupcake specialty store chain announced it was ceasing operations, a group of investors has stepped in to buy the company.

Lemonis Fischer Acquisition Company, L.L.C., a joint venture created by Marcus Lemonic L.L.C. and Fischer Enterprises, L.L.C., has agreed to acquire Crumbs Bake Shop as part of the company’s filing of voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the District of New York.

Lemonis Fischer Acquisition Co., which provided pre-petition secured financing to Crumbs, also has committed to provide debtor-in-possession financing to the company, subject to court approval. The agreement with Lemonis Fischer Acquisition Co. comprises the initial stalking horse bid in the Court-supervised auction process under Section 363 of the Bankruptcy Code. Under the terms of the asset purchase agreement, Lemonis Fischer Acquisition Co. would acquire substantially all of Crumbs’ assets. 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,” said Edward M. Slezak, chief executive officer and general counsel for Crumbs. “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, host of CNBC’s “The Profit” series and c.e.o. of Camping World and Good Sam Enterprises, said he believes in the Crumbs brand and is excited to help the company enter the next chapter of its history.

“I think there is tremendous opportunity to expand the Crumbs offering, build on the company’s growth strategy and to leverage the synergies between Crumbs and other companies in my and the Fischers’ portfolio, such as Dippin’ Dots ice cream, Doc Popcorn, Wicked Good Cupcakes, Little Miss Muffin, Betty Lou’s snacks, a host of gluten-free baked goods, Matt’s Cookies, Pie King, Key West Key Lime Pies, Mr. Green Tea Ice Cream, Sweet Pete’s Candy and Coffee of Grace (Grace Hightower De Niro), as well as a new exciting product from an episode of the upcoming fall season of CNBC’s ‘The Profit,’” Mr. Lemonis said.

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, Mr. Slezak will remain with the company throughout the process in order to ensure a smooth emergence and transition.

Crumbs was founded in 2003 and went public in 2011. The company opened to much fanfare, but more recently had been suffering from a steep decline in sales and income. Crumbs sustained a loss of $15,261,000 in the year ended Dec. 31, 2013, which compared with a loss of $7,695,000 in fiscal 2012. 

On July 7, Crumbs announced it had closed all its stores. The move came a week after the company was delisted from the Nasdaq. On July 10, media reports surfaced indicating that an investor group planned to revive the brand. The news led to a surge in the company’s share price, which jumped as high as 55c per share on July 10 after opening at 3c per share. The company’s stock moved up further on July 11, getting as high as 75c before closing at 65c.
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