Bruegger’s Bagels Franchisee Files for Bankruptcy

by San Antonio Attorney

The parent company of the 32 Bruegger’s Bagels bakeries located in the upstate area of New York announced on March 3, 2016 that it filed for Chapter 11 bankruptcy protection.

The pioneer branch located at the Congress Street in Troy was not spared from the bankruptcy filing.

HOT LLC, the proprietor of Bruegger’s Bagels and considered as the sole member of the Flour City Bagels expressed its desire to maintain operations while undergoing a debt restructure plan.

Flour city also runs its operations in shops located in Rochester, Syracuse and Albany.  13 shops out of 32 are sparsely located in the Capital Region, according to the bankruptcy filing made in the bankruptcy court in West New York district.

Kevin Coyne, the manager of HOT LLC, stated in the filing that most of the previous members of Flour City have made defaults on debts to primary lenders which amounted to a total of $10 million, precipitating their departure from the company.

Coyne said that measures have been taken to facilitate improvement towards the management of bakeries and pay the creditors as well.  These include the lessors and the Department of Taxation and Finance.  At least two of the landlords have facilitated an eviction of the Bruegger’s bakery and also its commissaries.

The bakeries raked in revenues in 2014-2015, worth $22 million.  The company also has debts with the state tax department worth $1 million dollars, prior to Coyne’s takeover last August 2015.  HOT intends to sell the company, regardless of retaining the franchise, since it also has debts of more than $700,000 in franchise fees to the main office of Bruegger’s Franchise Corp.

As an alternative measure to save the company, it will undergo a reorganization process under Chapter 11.  HOT LLC inquired the bankruptcy court if they should carry on with other sales programs such as the Bottomless Cup initiative and the gift card program.

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