Jack’s Donuts Files for Chapter 11 Bankruptcy in Indiana

NEW CASTLE, Indiana — Jack’s Donuts of Indiana Commissary LLC filed for Chapter 11 bankruptcy on October 29, 2023, in the U.S. Bankruptcy Court for the Southern District of Indiana. The filing follows the recent opening of a production and distribution center, known as the commissary, in New Castle.

The company previously operated 24 locations with 14 franchisees. However, its official website is currently down. According to court documents, Jack’s Donuts has over 100 creditors and total liabilities amounting to approximately $14.2 million. The company noted it has $1.4 million in total personal property assets.

Donna and Paul Ganote, who own multiple franchise locations, issued a statement on social media to clarify their independence from the commissary. “We are a franchise and have never been a part of the commissary or affiliated in any way,” they said, stressing that their businesses continue to thrive and serve handcrafted donuts.

Nicholas Georgakopoulos, a business law professor at IU McKinney Law School, stated that Chapter 11 allows for business reorganization rather than asset liquidation. “There will typically be an effort to make the business more effective,” he added, mentioning that obligations and ownership may change during this process.

The bankruptcy filings coincide with a cease and desist order from the Indiana Secretary of State’s Securities Commissioner against company CEO Lee Marcum, alleging violations related to unregistered securities. The order aims to protect investors and ensure compliance with the Indiana Uniform Securities Act, a matter that the Secretary of State is currently investigating.

Despite repeated requests for comment, Marcum has generally declined interviews but has expressed that the media scrutiny poses challenges for his franchisees and employees. He highlighted concerns over the disruption caused by public investigations at a critical time for the organization.

The situation surrounding Jack’s Donuts is ongoing, with further investigations into Marcum’s business practices bringing additional attention to the company’s financial health and operational future.