Doughnut maker and retailer Krispy Kreme Doughnuts has put its Canadian assets have been put up for sale seven weeks after the US doughnut company had the firm that owns and operates stores in Canada placed under bankruptcy protection, reports the Canadian Broadcasting Corporation.
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KremeKo Inc., which has exclusive franchise and licensing arrangements with Krispy Kreme Doughnut Corp., was forced on 15 April to file for protection from its creditors.
It decided this week that the greatest value could be achieved by an asset sale. The plan has the backing of Krispy Kreme and the company’s secured creditors.
KremeKo could end up selling the business as a going concern or it could entertain offers for the rights to operate Krispy Kreme franchises in Canada.
“People could put in an offer for each of those scenarios,” lawyer David Bish told the Canadian press. Bish represents one of KremeKo’s landlords, Cadillac Fairview.
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By GlobalDataUnder an agreement reached in 2000, KremeKo was required to open 32 stores within seven years and pay Krispy Kreme US$40,000 for each store plus 4.5% of sales.
However, by January this year rising losses had forced it to close six of its 18 stores, followed by another four outlets in April.
North Carolina-based Krispy Kreme’s once-rosy financial fortunes began dimming in the spring of 2004, when it reported its first quarterly loss, placing much of the blame on the rising popularity of low-carbohydrate diets.
The company is now being run by a corporate turnaround specialist while the US Securities and Exchange Commission investigates allegations of financial irregularities and exaggerated revenues.
