Outfox Hospitality, which was formed last year through the merger of Foxtrot and Dom's Kitchen & Market, filed for Chapter 7 bankruptcy on Tuesday, nearly a month after abruptly closing all of its locations in Chicago, Texas and Washington, D.C. I applied.
The company has an estimated number of creditors between 5,001 and 10,000, according to filings in U.S. Bankruptcy Court in Wilmington, Delaware. He claimed assets between $10 million and $50 million, but claimed his estimated debts were about the same. Outfox also suggested that once administrative costs are paid, there will be no funds left to pay unsecured creditors.
Chapter 7 bankruptcy involves selling some assets to repay creditors, whereas Chapter 11 bankruptcy involves a company continuing to operate and restructuring to repay creditors. Bankruptcy laws are different. A Chapter 7 filing would also mean the company would cease operations, said attorney Gregory Jones, a partner at Stradling, Yocca, Carlson & Routh in Newport Beach, California.
The company's executive committee approved the bankruptcy filing at a meeting on April 23, the same day Dom's and Foxtrot announced the immediate closure of its stores.
In a court filing, Outfox said it is filing for bankruptcy because its assets include perishable food products that “can quickly deteriorate or lose value if not attended to.” said “immediate action” was needed.
On May 10th, an online foreclosure sale of Foxtrot's assets was conducted via Microsoft Teams. The assets sold included “inventory, intellectual property, books, personal property, documents, furniture, fixtures and equipment, general intangible property and merchandise,” according to the notice.
Additionally, Point Enterprises purchased the property for more than $2.2 million, Crain's Chicago Business reported. According to reports, Dom's assets were also put up for auction, but there were no buyers.
The Outfox case “seems pretty bleak,” Jones said.
Mr. Jones, whose expertise includes bankruptcy and financial restructuring, said the company lacks cash to repay creditors.
“People who file caveat laws against companies, and I've seen this in other cases, are out of luck,” he said. “It’s unfortunate because these companies don’t have the money to make them happy.”
The bankruptcy is the latest in a series of legal issues involving Dom's, Foxtrot and Outfox.
People walk outside of Dom's Kitchen & Market in Lincoln Park on April 23 as it permanently closes.
On April 23, the specialty grocer announced it would be closing its stores. Former employees said they learned of the mass layoffs and store closures the same day, with one Foxtrot vendor saying he learned about it on Instagram.
At the time, Dom's posted on its website that it was a “difficult decision” and the result of both companies exploring multiple avenues to continue operations. Foxtrot also shared a similar message on its website.
The day after the shutdown, a class action lawsuit filed in the Northern District of Illinois alleges that Outfox, Doms, and Foxtrot failed to properly notify employees that they were being laid off, resulting in state and federal labor coordination lawsuits. It said it was a violation of the Retraining Notification (WARN) Act. off.
According to the complaint, former Foxtrot employee Jamil Moore said he learned it was his last day at work “when he was fired mid-shift at approximately 11:30 a.m.” .
A second class action lawsuit was filed in April, alleging that Outfox “failed to provide the 60-day written notice required by the WARN Act.”
The Illinois Warning Law requires employers with 75 or more full-time employees to provide at least 60 days' notice of any mass layoffs or closures. The federal WARN law applies to businesses with 100 or more employees.
Dom's and Foxtrot then filed warning notices, informing the state that they had laid off 281 and 66 employees, respectively.
But the lack of notice sparked protests among some former employees. Last month, about 20 former workers and supporters rallied in front of the Foxtrot kiosk in Pilsen, demanding 60 days of back pay. Arise Chicago, a labor rights group, said it worked with some former Foxtrot employees to file a complaint with the Illinois Department of Labor, which is investigating the complaint.
Foxtrot operated 15 stores in Chicago and 17 in Dallas and Austin, Texas, and Dom's had two stores in Chicago, at 2730 N. Halsted St. and 1233 N. Wells St.
