Jack’s Donuts of Indiana Commissary Files Chapter 11 Bankruptcy

Jack’s Donuts of Indiana Commissary LLC has filed for Chapter 11 bankruptcy, as reported on October 29. The filing occurred in the U.S. Bankruptcy Court for the Southern District of Indiana. This legal action comes amid ongoing civil lawsuits and judgments involving the company and its CEO, Lee Marcum.

Details of the Bankruptcy Filing

The bankruptcy documents reveal that Jack’s Donuts of Indiana Commissary has over 100 creditors and liabilities amounting to $14.2 million. In contrast, the company possesses over $1.4 million in total personal property assets.

Key Creditors and Judgments

• Carter Logistics: Claims a $769,000 debt for unpaid donut deliveries.
• Old National Bank: Holds a judgment of $3.5 million against the company.
• Angi Bone: Former franchisee with a claim of $40,000 against the company.

Franchise owners Donna and Paul Ganote, managing locations in Brownsburg, Plainfield, and other areas, clarified on social media that they are independent and not affiliated with the troubled commissary. They maintained that their franchises continue to operate successfully.

Impact on Business Operations

Chapter 11 bankruptcy permits companies to reorganize their debts under judicial supervision without liquidating assets. Business law professor Nicholas Georgakopoulos notes that such reorganization often involves adjusting ownership and debt obligations.

In the same week, two other businesses associated with Marcum, Marcum Industries and KCL Group, also filed for Chapter 11 bankruptcy.

Regulatory Issues

Additionally, Marcum faces scrutiny from the Indiana Secretary of State’s Securities Division, which issued a cease-and-desist order on May 5. This order accuses Marcum of unlawfully offering unregistered securities, violating state securities laws.

The Secretary of State’s office stated that proper registration of securities is crucial for investor protection. This investigation was the first sign of government action regarding Marcum’s business practices.

Public Response and Future Outlook

Lee Marcum has refrained from direct media interactions but issued statements concerning the adverse effects of recent investigations. He emphasized the importance of stability for franchisees and the company moving forward.

As Jack’s Donuts navigates this challenging period, the remainder of its franchise network remains operational, potentially easing concerns among its loyal customer base.