Updated at 4:48 p.m.
Vermont-based Koffee Kup Bakery closed its doors without plans to reopen on Monday, leaving hundreds of employees out of work.
According to a notice filed with the state Department of Labor, 247 employees lost their jobs. Of those, 156 worked at the company’s Burlington location and 91 worked at a Brattleboro subsidiary, the Vermont Bread Company.
“The department has already started the process of reaching out to the company in an effort to provide job loss services around unemployment insurance and re-employment efforts to those employees that were impacted,” said Kyle Thweatt, a spokesperson for the Department of Labor.
In Brattleboro, the Vermont Bread Company sat quiet Tuesday. The business, founded in a barn in 1978 and acquired by Koffee Kup in 2013, was a local success story. It made USDA-certified organic products without artificial ingredients, high fructose corn syrup or chemical preservatives.
Brattleboro employees who came to work Monday were told only to go home because their Cotton Mill Hill facility was closed. A day later, neither staffers nor local leaders knew much more than what they learned from a company statement indicating that it had no plans to reopen.
“They could’ve at least had the respect to let their employees know what was going on!” one of dozens of frustrated locals posted on Facebook. “A lot of them have families and young children.”
Koffee Kup manufactured baked goods, including breads, donuts and English muffins, delivering them to 4,500 locations throughout the Northeast and mid-Atlantic.
At his press conference on Tuesday, Gov. Phil Scott called the layoffs “very unfortunate.”
“I knew that there was some financial issues over the last year or so, but it took me by surprise that they shut down so quickly yesterday,” Scott said. “It’s a bit of an iconic brand for us here in Vermont, I’m hopeful that maybe someone else could make a viable concern out of it, we’ll see what happens.”
Jeff Sands, the senior adviser for North America of the American Industrial Acquisition Corporation, which acquired a majority of the shares of the Koffee Kup on April 1, said in a statement that for each of the last four years, Koffee Kup suffered “substantial financial losses,” and was unable to find a way out of its troubles.*
“Employees, lenders, suppliers and customers all went above and beyond to support Koffee Kup during that time,” Sands said. “In the last six months the company was unable to find a new investor/operator who was willing to commit the resources necessary to bring the company back to health. Management wishes to thank everyone for their support over the years.”
In the notice, Sands wrote that Koffee Kup was in default of “certain terms and conditions” of its outstanding loans with lenders, and that the lenders allowed the company to keep operating under a forbearance agreement that has since expired.
He said there were many discussions and negotiations aimed at continuing operations through other potential investors.
“However, none of these investors have made an offer acceptable to the senior lender and they have declined to further extend the forbearance agreement and declined to loan any additional funds to the company,” Sands wrote. “Because of this, continuing operations is no longer commercially reasonable or prudent.”
Last Thursday, Koffee Kup received default notices from lenders demanding immediate payment of outstanding loans, and exercising its rights to take possession of its assets and confirming it would no longer extend credit to cover operating costs, including payroll.
“Therefore, although many promising avenues were explored that we were cautiously optimistic would have allowed Koffee Kup to survive, those efforts have now been exhausted without success and Koffee Kup no longer has sufficient capital to continue operations,” Sands wrote.
Sands said giving employees earlier notice would have jeopardized attempts to save the company.
A press release issued by G2 Capital Advisors earlier this month said that Koffee Kup was looking for the “optimal partner” to support the company’s long-term growth strategy.
G2 provides advisory services in corporate mergers and acquisitions.
“The company is in the process of repositioning its business to capitalize on a compelling platform of established brands, private label partnerships, long-term relationships with blue-chip retailers, and a vast distribution network,” the press release stated.
Koffee Kup Bakery was founded in 1940 as a small family business in Burlington, delivering bread by horse-drawn wagon. The company changed ownership in 2011.
In addition to its two Vermont locations, Koffee Kup also employed a number of people in North Grosvenor Dale, Conn. It is unclear if that facility has also closed.
*Editor’s note: AIAC has been described as the buyer of Koffee Kup Bakery by court-appointed receiver Ronald Teplitsky’s counsel, Nolan Heller Kauffman LLP, and Koffee Kup’s financial adviser, G2 Capital Advisors. However, AIAC said in June that it served only as a transaction broker for a third-party buyer it has declined to identify.
