NEW YORK (The Deal) -- That's the way the cookie crumbles. Or, in this case, the cupcake.
Crumbs Bake Shop (CRMB), the New York maker of delectable frosted treats, is ceasing operations and looking at a bankruptcy filing, according to reports that emerged late Monday, July 7.
Next, sources say, private equity firms may look to bid on the company's assets. So far in 2014, LBO shops have sought deals with consumer brands and restaurants, pushing up sector multiples.
Industry watchers said private equity shops have long been reluctant to consider Crumbs as an LBO target, in part because until recently it operated more than 60 stores in about a dozen states; when the Wall Street Journal reported news that it would close its doors, that number had fallen to 48 locations.
Crumbs' rise and fall was quick; it went public valued at around $13 a share in 2011 via a merger with a special purpose acquisition company and grew at its peak to 70 locations. However, as Americans' infatuation with fattening cupcakes began to subside, so did Crumbs' performance, and its stock plummeted soon after its debut.
The stock was suspended from the Nasdaq on July 1, after Crumbs failed to meet minimum market listing requirements. That, in turn, triggered a default on Crumbs' debt.
In January 2014, the company said it completed a $5 million senior secured credit facility with Oklahoma-based Fischer Enterprises LLC; Fischer bought another big dessert fad in 2012, Dippin' Dots Inc., after its bankruptcy.