Gigi’s Cupcakes filed for Chapter 11 bankruptcy protection on Jan 4, 2019, and on Jan 25, three weeks later, its holding company FundCorp filed similar paperwork in the Bankruptcy Court in the Northern District of Texas. In a Fundcorp statement, “the delay in the FundCorp filing was due to nothing more than administrative time constraints required to prepare the paperwork. “
Franchisees Sue Gigi’s
18 current and former franchisees are in a lawsuit against Gigi’s Cupcakes and its parent company. The chief complaint against Gigi’s Cupcakes is that the company misled them about company finances.
Normally when a company files for Chapter 11 protection the law called automatic stay stops lawsuits from moving forward, Gigi’s lawsuits will continue because other parties are named as defendants besides the two parties that filed bankruptcy.
According to a declaration from Dawn Ragan, a director with CR3 Partners LLC who is serving as chief restructuring officer for the businesses, says a combination of unprofitable stores and “litigation and other legacy liabilities inherited from the Gigi’s acquisition” strained the companies’ finances.
Gigi’s Cupcakes liabilities include $9.25 million in loans from Equity Bank, $34,000 loan from Happy State Bank and an additional debt of $250,000 of trade debt and unpaid obligations.
No Changes in Products
KeyCorp said in a statement that “customers shouldn’t see any changes in service or the quality of our products.”
Fundcorp purchased Gigi’s Cupcakes in 2016 from Gina “Gigi” Butler who launched the cupcake business in 2008 in Nashville Tennessee. Fundcorp moved Gigi’s corporate office from Nashville to Fort Worth Texas.
If you are struggling to pay your bills and have overwhelming debt, contact a Fort Worth bankruptcy attorney to find out what options you may have to get a fresh financial start.