Cupcake chain Crumbs filed for bankruptcy Friday evening, with plans to sell to a large investor group and reopen for business after abruptly shuttering its dozens of stores earlier this week.
A financier group that includes CNBC host Marcus Lemonis and Dippin’ Dots owner Fischer Enterprises plans to finance Crumbs during the bankruptcy process and intends to reopen Crumbs stores, the Wall Street Journal reports.
Cupcakes will continue to be central to Crumbs’ menu.
“Crumbs is known for its high-quality cupcakes, which will remain a mainstay in the new company but will be supplemented by a much improved product mix to broaden its appeal to a larger customer base,” Scott Fischer, the chief operating officer of Fischer Enterprises, said in a statement.
Crumbs has listed assets and liabilities of between $10 million and $50 million each, according to a Chapter 11 bankruptcy filing made Friday. The company defaulted on a $9.3 million loan shortly before closings its stores.
Crumbs began in 2003 as a shop on the Upper West Side of Manhattan run by a husband-and-wife team, Jason and Mia Bauer. It then went public in 2011 as part of a boutique cupcake craze. But the company has been hemorrhaging money in the past two years, losing $18.2 million last year, and posting a $10.3 million loss in 2012 as customers’ desire for the sweet pastries seems to have faded.
The Chapter 11 reorganization will shoot some life into the teetering company, said the company’s new investors.
“Our goal is to create a viable business model by making Crumbs the nation’s ‘sweet and snack’ destination,” financier Lemonis said in a statement.