Marylanders may have relished the delicious baked goods at Crumbs for nearly 11 years. But, that enjoyment is ending as the publically held company announced that it was closing all locations and letting go all employees. Customers had been gobbling up giant cupcakes, but in the last few months, sales were dropping. In the first quarter of this year, the company reported a loss of nearly $4 million, which was added to last year’s loss of $2 million.
Two months ago, the company issued a warning by filing with the Securities and Exchange Commission, stating that it may have to stop activities, if the business did not generate enough cash flow. Recently, Crumbs lost its listing on the Stock Exchange, after which the company announced its decision to cease operation.
The 65 bake shops employed more than 800 full- and part-time employees, and the loss of employment was expected by most of the workers, according to reports. The company also stated it will file a Chapter 7 bankruptcy, while weighing its limited options. A Chapter 7 business filing allows clearing of debts for a fresh start. In this type of bankruptcy, the assets and properties of the person or business are collected and then sold to pay outstanding debts. Any remaining unpaid debt is discharged or eliminated.
In some personal bankruptcy cases, the law may allow the debtor to retain certain property and assets. Most often, a mortgaged house, car and some personal property are retained. However, only property worth less than a derived value may be retained. While filing for Chapter 7 bankruptcy may not be easy, understanding the laws related to bankruptcy filing through affiliation with an experienced Gaithersburg Maryland Chapter 7 lawyer may help a debtor or failing business make informed decisions for a fresh financial start.
Source: ABC 7, “Crumbs Bake Shop to close all locations,” July 8, 2014