Jack’s Donuts Indiana Commissary Files Chapter 11 Bankruptcy

Jack’s Donuts of Indiana Commissary LLC has officially entered Chapter 11 bankruptcy. This filing occurred on October 29, 2023, in the U.S. Bankruptcy Court for the Southern District of Indiana.

Background of Jack’s Donuts

Jack’s Donuts recently opened a production and distribution center in New Castle, referred to as the commissary. The company previously boasted 24 locations and 14 franchisees, although their official website is no longer operational.

Details of the Bankruptcy Filing

According to filings, the company faces more than 100 creditors and has amassed liabilities of approximately $14.2 million. It reports total personal property assets of $1.4 million.

Key Creditors

• Carter Logistics: Sued for unpaid deliveries totaling $769,000.
• Old National Bank: Holds a significant judgment amounting to $3.5 million.
• Angi O’Connell Bone: A former franchisee with a claim of $40,000.

Franchise Owners’ Response

Donna and Paul Ganote, owners of several franchise locations, have clarified their independence from the commissary operations. They assured customers that their franchises continue to operate normally, emphasizing their commitment to handcrafted donuts.

Comments from Experts

Nicholas Georgakopoulos, a business law professor at IU McKinney Law School, explained that Chapter 11 bankruptcy typically allows companies to reorganize rather than liquidate their assets. This can include restructuring ownership and debt obligations.

Related Legal Issues

In conjunction with the bankruptcy filing, Lee Marcum, CEO of Jack’s Donuts, and associated businesses also filed for Chapter 11 on the same day. Additionally, a cease and desist order has been issued against him by the Indiana Secretary of State’s Securities Commissioner due to violations involving unregistered securities.

Cease and Desist Order Details

• Issued on May 5, 2023.
• Involves allegations of two unlawful securities offerings.
• Intended to protect investors by enforcing proper registration of financial securities.

Current Status and Outlook

Marcum has declined numerous interview requests regarding the bankruptcy and legal matters. He did, however, express concerns over the negative impact of media investigations on his organizations and affiliated stakeholders.

This situation continues to develop, with ongoing investigations into Marcum’s business practices, shedding light on the financial stability of Jack’s Donuts and its franchising operations.