Mrs. Fields Famous Brands LLC, which licenses about 1,200 Mrs. Fields Cookies and TCBY frozen yogurt locations worldwide, plans to file for Chapter 11 bankruptcy protection.
According to a document filed with the U.S. Securities and Exchange Commission last Friday, the Salt Lake City, UT-based company has begun soliciting votes from creditors for a “prepackaged” reorganization plan.
Mrs. Fields is seeking protection because it is unable to make an interest payment next month, the filing states. The company says it was hurt by a sluggish economy, coupled with rising gas and food commodity prices. It posted a net loss of about $10.7 million for the quarter ended June 28.
The firm plans to continue baking its famous cookies–which are also sold online and via its print catalog–during the reorganization. But it will likely divest itself of TCBY and other parts of the company, according to the filing. Mrs. Fields bought TCBY in 2000 for $140 million in cash.
In July, Michelle Cowley, director of purchasing and distribution at Mrs. Fields, said rising fuel prices were having a negative effect on profit.
“Global demand and the use of corn for fuel, as well as a change in what crops are grown, has also had an impact,” she said. “Speculators are driving up pricing on raw ingredients artificially. The global economy is affecting costs as well.”
More than two-thirds of the company’s bondholders reportedly have agreed to vote in favor of the restructuring plan, though their support is contingent upon the firm submitting its bankruptcy filing to the court by Aug. 25.
Mrs. Fields was founded in 1977 when Debbi Fields began selling homemade cookies out of the kitchen of her California home.
She no longer has a role or association with the company, having resigned as a director and consultant in 2000. But on Monday, she issued this statement:
“As the founder of Mrs. Fields Cookies, I hope the proposed reorganization will place the company in the hands of owners who believe, as I do, in the power of quality products and quality people,” she said.
She added: “Hopefully, reorganization will allow Mrs. Fields Cookies to do what it was built to do: make the best cookies in the world, serve happy and loyal customers, and never compromise on the quality of its product or its people. These are the principles that made the brand great and what I believe will allow Mrs. Fields Cookies to delight customers for generations to come.”