(Reuters) - Crumbs Bake Shop Inc may get a second chance if a bankruptcy judge approves a deal for the owner of Dippin' Dots ice cream and the star of a reality television show to buy and reopen the U.S. cupcake chain, according to a court document.
Crumbs, which specialized in oversized cupcakes and went public in 2011, shuttered its nearly 50 locations in 10 states and the District of Columbia on Monday. It filed for Chapter 11 bankruptcy on Friday.
Part of the group seeking to buy the chain is Marcus Lemonis, star of CNBC reality show "The Profit" and known as the "business turnaround king." He, along with Fischer Enterprises LLC, the owner of Dippin Dots, would provide debtor-in-possession financing and subsequently buy the cupcake chain through a joint venture called Lemonis Fischer Acquisition Co, according to the document.
They would reform Crumbs as a privately held company, reopen its stores and resume operations.
Crumbs' existing line of cupcakes would remain a mainstay, but would be supplemented by a "much improved" product mix to appeal to a wider customer base, Scott Fischer, the chief operating officer of Fischer Enterprises, said in a statement. Fischer Enterprises bought Dippin' Dots out of bankruptcy in 2012.
Fischer reported a 14.95 percent stake in Crumbs as of Dec. 30 and invested $5 million in January, according to filings with the U.S. Securities and Exchange Commission.
New York-based Crumbs listed assets and liabilities between $10 million and $50 million in the bankruptcy filing in New Jersey court.
The news follows less than a month after the NASDAQ announced it would stop trading Crumbs, which hoped that the frosted cake made famous by Magnolia Bakery in New York City and "Sex and the City" could fuel growth at a nationwide chain.
Crumbs had seen a steep decline in profitability since its debut on the market: In its quarterly report from March, the company posted an accumulated deficit of $28.8 million.
The case is In re: Crumbs Bake Shop Inc, U.S. Bankruptcy Court, District of New Jersey (Newark).
(Reporting by Ramkumar Iyer in Bangalore; Editing by Lisa Shumaker)