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US Crumbs Bake Shop closes its doors

Article By: ,  Financial Analyst
July 8, 2014 5:15 PM

US cupcake chain Crumbs today (July 8th) announced it has ceased all activities, a week after its shares were suspended from trading on the Nasdaq index.

The New York-based chain is shutting down all 48 of its stores across the country, the BBC reports.

"Regrettably Crumbs has been forced to cease operations and is immediately attending to the dislocation of its employees while it evaluates its limited remaining options," the company said in an emailed statement. That will include filing for Chapter 7 bankruptcy liquidation.

Crumbs listed on the stock market in 2011 at the height of the cupcake boom. It had 65 shops in 12 states and Washington DC as of the end of March, according to its website. 

Since then, its financial outlook has grown bleak. Crumbs reported a loss of $18.2 million (£10.6 million) last year, which came on top of a $10.3 million loss in 2012.

The company had already been closing underperforming stores since the end of 2013.

As of the end of last year, Crumbs listed 165 full-time employees and about 655 part-time hourly employees as working in its stores.

The Nasdaq Stock Market suspended trading of Crumbs shares on July 1st, citing the company's failure to meet a requirement of either having at least $2.5 million in shareholder equity or meeting benchmarks for its market cap or annual net profit.

The company's stock, which once traded at $13 per share, had fallen below 30 cents a share last month.

Crumbs said in a regulatory filing Thursday quoted by the Wall Street Journal that the trading suspension would trigger an event of default on July 6th of $9.3 million in senior secured convertible tranche notes and $5.1 million in unsecured notes.

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