Judge approves Crumbs bidding procedures
NEW YORK ( TheDeal) -- Cupcake retailer Crumbs Bake Shop
Judge Michael B. Kaplan of the U.S. Bankruptcy Court for the District of New Jersey in Newark approved the bidding procedures for the sale of substantially all of the company's assets at a Thursday, July 24, hearing, according to debtor counsel Michael D. Sirota of Cole Schotz Meisel Forman & Leonard .
Lemonis Fischer Acquisition , a joint venture of Marcus Lemonis and Fischer Enterprises , will serve as the stalking-horse bidder for the auction with a $6.64 million credit bid. The stalking-horse bidder also would assume certain liabilities through the sale.
The offer includes a credit bid of the $5.51 million outstanding on prepetition debt plus the all-new-money $1.13 million debtor-in-possession loan from the proposed buyer.
Kaplan on July 16 authorized interim use of $200,000 of the DIP. A final hearing is scheduled for July 31.
Marcus Lemonis is the host of CNBC's "The Profit" and CEO of CWI Inc. and Good Sam Enterprises . Fischer Enterprises is an investment firm founded by Mark Fischer, the CEO of Oklahoma City's Chaparral Energy , and lent Crumbs $5 million in January.
According to Sirota, the proposed bidding procedures were revised after the official committee of unsecured creditors objected.
The creditors' committee on Wednesday asserted the proposed timeline was far too short since the committee was just formed; the amount of the stalking-horse bid was unclear; and the breakup fee and expense reimbursement were "excessive and should not be approved," among other concerns.
The revised bidding procedures reduced the breakup fee to 1.5% from 3%, and the cap on expense reimbursement fell to $125,000 from $150,000, Sirota said.
Interested parties have until Aug. 19 to offer roughly $6.91 million: the stalking-horse bid, breakup fee, expense reimbursement and a now $50,000 initial overbid.
If Crumbs received a rival offer, it would hold an auction on Aug. 21, at which bids would have to increase in increments of at least $50,000, rather then the originally proposed $100,000 increments, Sirota said. He noted that during the auction, the debtor could alter the bidding increments.
A sale hearing has been scheduled for Aug. 26, Sirota said.
According to the bidding procedures motion, Crumbs financial adviser Peter N. Schaeffer of GlassRatner Advisory & Capital Group approached 127 parties about buying the company. Of those, 58 parties chose to receive more information regarding a potential transaction, but the financial adviser has not yet received any other formal proposals for the sale of the company.
Crumbs filed for bankruptcy protection on July 11 after shutting down all 49 of its cupcake stores just days earlier.
The New York debtor operated the nation's largest cupcake store chain before ceasing operations on July 7 due to liquidity constraints and a lack of cash. The company had 49 stores in New York, Connecticut, Delaware, Illinois, Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island, Virginia and Washington, D.C., selling beverages, cupcakes and other baked goods, such as push-up pops, cakes, cookies, pastries, scones, croissants, brownies and muffins.