US doughnut maker and retailer Krispy Kreme has provided further details on the bankruptcy of its Philadelphia franchisee Freedom Rings.

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The company said on Monday that Freedom Rings had filed for Chapter 11 bankruptcy. Freedom Rings operates six out of the approximately 360 Krispy Kreme stores and 50 satellites located worldwide. Prior to the filing, Krispy Kreme, which previously owned 70% of Freedom Rings, acquired the 30% minority interest for a nominal consideration.


Krispy Kreme said Freedom Rings owes its parent company approximately US$24.1m which, excluding lease obligations, constitutes substantially all of its indebtedness.


“To date, for financial reporting purposes, amounts owed by Freedom Rings to Krispy Kreme have been eliminated in consolidation. As a result of the bankruptcy filing, Krispy Kreme expects to deconsolidate Freedom Rings. As part of its previously announced review of the financial difficulties of certain of its franchisees, Krispy Kreme will determine the amount of impairment charge necessary in connection with Freedom Rings,” the company said.

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