Marcus Lemonis Has a Sweet Tooth for a Bankrupt Crumbs Bake Shop

Marcus Lemonis Has a Sweet Tooth for a Bankrupt Crumbs Bake Shop

By: Tomas Ronolski - AllPennyStocks.com News

Friday, July 18, 2014

Marcus Lemonis, star of CNBC’s show The Profit, has had his hand in the cookie jar and other parts of the kitchen stocking sweets, literally. It’s his right, though, as he often owns the kitchen. Amongst other brands, Lemonis, which actually sounds like the name of a dessert itself, has in his portfolio Matt’s Cookies, Key West Key Lime Pie, Mr. Green Tea Ice Cream and Sweet Pete’s Candy. The turnaround expert, who puts his own money into rescuing flagging companies with promise, has now partnered with Fischer Enterprises, the owner of Dippin’ Dots ice cream and Doc Popcorn, in a bid to save newly bankrupt Crumbs Bake Shop. Incidentally, Fischer bought the popular Dippin’ Dots brand out of bankruptcy two years ago. Crumbs Bake Shop (Pink Sheets:CRMBQ), a New York City-based cupcake specialty store chain that went public three years ago, told its employees on July 9 that it was forced to shutter its doors and cease operations. On July 11 the company had inked an asset purchase agreement with Lemonis Fischer Acquisition Company, LLC, as the freshly formed joint venture threw a lifeline of cash to Crumbs and setting the “stalking horse” bid for the company at about $6.5 million as part of the Chapter 11 proceedings. $5.5 million of the bid is already owed to Fischer from a loan given to Crumbs earlier in 2014.


If Crumbs receives a higher offer, Lemonis Fischer is due a 3 percent break-up fee.

Judge Michael Kaplan of the U.S. Bankruptcy Court in Trenton, New Jersey is fast-tracking the process, setting a hearing for July 24, lending hope that the cupcake makers will be able to reopen some of their doors. Lemonis Fischer, which still has to get the court’s blessing to make the acquisition, has provided pre-petition secured financing to Crumbs and committed to provide debtor-in-possession financing as well.

Some stores are going to remain closed, as gauged by Crumbs asking the court for permission to reject leases for 21 unprofitable stores that represent an unnecessary expense, which would save the company almost $200,000. Crumbs has 49 locations in all, with Lemonis Fischer looking to acquire about 30 of them in the bankruptcy, according to the Wall Street Journal. The stores that do reopen under the Lemonis Fischer umbrella will not rely solely on cupcakes either. Lemonis said on CNBC that other treats will be part of the shops, whether it’s pies, cookies, ice cream or cake, allowing the company to remain nimble as fads move in and out in popularity with consumers. Turning things around won’t be easy, with Lemonis saying it’s going to take a “Herculean” effort.

On Friday, Crumbs said that the U.S. Bankruptcy Court for the District of New Jersey has approved all of the First Day Motions related to its bankruptcy. Amongst other things, the court approved the DIP financing from Lemonis Fischer, the closing of certain stores and the authority to maintain current operations and pay employees as the process continues.

Shares of then Nasdaq-listed CRMB traded as high as $16 in mid-2011, but have slowly slid into oblivion, including hitting 2 cents with the filing of bankruptcy. News of Lemonis Fischer coming in the picture catapulted the stock back upward from 3 cents to a high of 75 cents last Thursday and Friday. Shares have slumped back some since (including a low of 13 cents on Wednesday), but are back on the move, rising about 11.5 percent in Friday action to 34 cents. Even though shares are on the move up over the last week or so, things are still turbulent and with the Company still in bankruptcy proceedings, the future for the cupcake maker is still very murky to say the least. Due diligence, is as always, highly recommended.

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