Gigi’s Cupcakes Bankruptcy: Popular Sweets Company Files Chapter 11

The company is on the hook for a $9 million loan it hasn't repaid

Gigi’s Cupcakes has filed for Chapter 11 bankruptcy as the company has struggled to pay for a $9 million loan.

Gigi's Cupcakes Bankruptcy
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The chain bakery is mostly known for having dozens of locations in the Midwest and Southeast, and it now filing for bankruptcy over unpaid loans. The filing was made last week in a bankruptcy court in Texas, where the company moved its corporate offices in 2016, in conjunction with Sovrano, a company that owns food chains such as Gatti’s pizza.

Both companies were linked with private equity group FundCorp. Gigi’s Cupcakes is also facing a lawsuit from a group of franchise owners who claim the private equity group raised the prices of its food items after taking over a couple of years ago.

The consortium is being represented by Jeffrey Cohen, who told QSR that the bankruptcy proves that my clients who are suing Gigi’s Cupcakes for misrepresenting the financial performance of the company were correct.” Cohen added that he believes the operators of the private equity firms “sucked the money out of the companies and they put them into bankruptcy.”

The cupcake chain has been around since 2008, when Gigi Butler established the company’s first store in Nashville. There are some franchises that may continue operating despite the Gigi’s Cupcakes bankruptcy, although it is unclear which ones will and which ones will not in the coming months.

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