Former No. 1 Krispy group files for Ch. 11 bankruptcy

Nation's Restaurant News,  Sept 3, 2007  

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FULLERTON, CALIF. -- Great Circle Family Foods LLC., a 12-unit Krispy Kreme Doughnuts franchisee that at one point was the chain's largest operator, filed for Chapter 11 bankruptcy Aug. 22 but will continue to operate its Southern California units while seeking a restructuring.

Great Circle's largest secured creditor is General Electric Capital Business Asset Funding Corp., with a claim of about $7.5 million. Total liabilities were stated as $1 million to $100 million.

In 1998, Great Circle agreed to open as many as 42 units. However, two years ago the franchisee and principals Richard Reinis and Roger Glickman sued the franchisor, alleging that it had conspired to bankrupt Great Circle so that it could be acquired for "cents on the dollar." The plaintiffs also alleged that Krispy Kreme had overcharged for equipment and supplies, misappropriated franchisee funds and improperly changed Great Circle's payment terms.

The parties settled the dispute last year, with a Krispy Kreme subsidiary paying $2.9 million for three of Great Circle's outlets, leaving it with 17 at the time.

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