A July 9 report has been released discussing the sudden shut down of the Crumbs Bake Shop and all its locations. This is a shocking move, since bankruptcy, either Chapter 11 or Chapter 7, would be more beneficial if the company wanted to stay open or settle with creditors. The sudden move by the company has left a number of people questioning just what happened, and others want to know what kind of bankruptcy the company with have to go with.
Chapter 7 seems to be the answer, although Chapter 11 bankruptcy would allow the company to have greater control over its assets and liabilities. The company would receive time to cancel or continue leases and sort out payment plans for rental properties. If the company is still in the middle of leases, it’s possible that landlords of the properties will ask a judge to talk to the Crumbs business and to find a way to make room for new businesses to fill those spaces while setting Crumbs’ debts.
Crumbs allegedly went into “full shutdown mode” on July 7, but it may be continuing some of its leases, especially if they are favorable to the company. Landlords may have some issues filling the holes left behind by the company, but that’s partly due to the small size of the locations. Some coffee shops and small food companies have allegedly expressed an interest in the businesses’ old locations.
There is a law in place that caps how much a landlord can get in rent, even if the lease is another 10 years, according to the story. The damages a landlord can claim are capped, and this allows other creditors to be paid back as well.
Bankruptcy can seem like a last-ditch effort to get out of debt, but if you’re struggling with debt, it may actually offer debt relief while you restructure your company. There are ways to stop harassment and to work on settling your debts.
Source: The Real Deal, “Crumbs’ abrupt exit leaves questions for landlords” Tom DiChristopher, Jul. 09, 2014by