Bidders for the recently closed Koffee Kup Bakery and subsidiary Vermont Bread Company are mulling a lawsuit after a court-appointed receiver accepted a last-minute offer Monday to sell the businesses to Flowers Foods, a $4.4 billion maker of national brands ranging from Nature’s Own to Wonder Bread.
“The Koffee Kup and Vermont Bread Company brands have a strong consumer following in the region and we’ll be evaluating their role within our brand portfolio,” Flowers Foods CEO Ryals McMullian said in a statement late Monday. “We have no immediate plans to reopen the bakeries but will be assessing how they may fit our strategic network optimization efforts in the future.”
Some 150 Koffee Kup workers in Burlington and another 100 Vermont Bread workers in Brattleboro were surprised April 26 to find their plants abruptly shuttered without explanation, leading a court to appoint receiver Ronald Teplitsky of New York’s Next Point LLC to sell the assets.
After a month of closed-door bidding, Mrs. Dunster’s — Atlantic Canada’s largest family-owned bakery — announced May 27 it was the receiver’s “preferred purchaser” to resurrect the Vermont brands and reopen the Burlington and Brattleboro plants. The news came the same day the state awarded the New Brunswick family company up to $1.8 million in incentive money.
But hours before an online court hearing Monday to address other issues, Mrs. Dunster’s and other bidders were surprised to learn the receiver had changed his mind and decided to accept an offer from Flowers Foods for an undisclosed price.
The Georgia-based company, whose portfolio also includes Dave’s Killer Bread and Tastykake, issued a late-afternoon statement saying it had acquired the Koffee Kup and Vermont Bread brands and three closed bakeries in Burlington, Brattleboro and North Grosvenor Dale, Connecticut.
But the press release’s lack of specifics about whether or when any of the plants would reopen concerned Mrs. Dunster’s and other bidders.
“This is completely out of left field,” Mrs. Dunster’s co-CEO Blair Hyslop told VTDigger. “We are exploring all of our options.”
That includes asking a judge to stop the sale, as the court has given interested parties a week to respond.
The recent saga comes in contrast to Koffee Kup’s otherwise smooth history, which began when founder Cherie Roberge came to Vermont from Canada in 1925 to deliver homemade bread and rolls in a horse-drawn wagon.
The American Industrial Acquisition Corp., a New York-based investment firm, purchased Koffee Kup on April 1 and agreed to provide up to $2.5 million in financial support*. But AIAC closed the business three weeks later.
“For each of the last four years Koffee Kup has suffered substantial financial losses and was unable to find a way out of their troubles,” it said in a statement. “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.”
The Vermont Department of Labor was notified of the closure on the day it happened and not in advance, as required by statute. That spurred an employee to file a proposed $5 million class action lawsuit alleging the company didn’t give proper notice to its employees.
Workers also complained that the company paid out accrued vacation and sick time into their accounts, only to have it electronically retracted because of a disagreement about who’s responsible for covering an estimated $800,000 in such obligations.
KeyBank has filed its own lawsuit seeking more than $7 million in loans.
VTDigger was not present at Monday’s court hearing, which was held virtually. According to people in attendance, the receiver’s lawyer would not disclose the sale price but said it would cover the costs owed to workers and KeyBank.
Asked to respond, KeyBank spokesperson Karen Crane said only, “The receiver and Flowers Foods have consummated the sale of the Koffee Kup Bakery assets. We cannot speak for the buyer, and KeyBank is not at liberty to comment further.”
*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.