Dom's Kitchen & Market, Foxtrot file Chapter 7 bankruptcy
A person carries an appliance out of Dom’s Kitchen & Market in Lincoln Park last month, when shoppers learned the specialty grocer would be closing.
Pat Nabong/Sun-Times
Outfox Hospitality — formed last year after the merger of Foxtrot and Dom's Kitchen & Market — filed for Chapter 7 bankruptcy on Tuesday, nearly a month after abruptly shuttering all of its stores in Chicago, Texas and Washington D.C.
The company estimated 5,001 to 10,000 creditors, according to a filing with the U.S. Bankruptcy Court in Wilmington, Delaware. It claimed between $10 million and $50 million in assets, but also claimed the same range in estimated liabilities. Outfox also indicated that once administrative costs are paid, there would be no money left to pay unsecured creditors.
Chapter 7 bankruptcy involves the sale of some assets to pay back creditors and is different from Chapter 11 bankruptcy, where a company remains operational and restructures in an attempt to pay back creditors. Filing Chapter 7 also means the company stops operating, said attorney Gregory Jones, partner at Stradling Yocca Carlson & Rauth in Newport Beach, California.
The company's board of managers authorized filing for bankruptcy during an April 23 meeting — the same day Dom’s and Foxtrot announced the immediate closure of its stores.
The bankruptcy filing needs “immediate attention,” Outfox indicated in its court filing, because its properties includes perishable goods that “could quickly deteriorate or lose value without attention.”
On May 10, an online foreclosure sale of Foxtrot's assets was held through Microsoft Teams. Assets sold included "inventory, intellectual property, accounts, chattel paper, documents, furniture, fixtures & equipment, general intangibles and goods," according to a public notice.
Further Point Enterprises purchased the assets for more than $2.2 million, reported Crain's Chicago Business. A sale of Dom's assets were also up for grabs but there was no buyer, according to the report.
Outfox's case "looks pretty bleak," Jones said.
Jones, whose area of focus includes bankruptcy and financial restructuring, pointed to the company's lack of cash to pay back creditors.
"The people — and I've seen this in other cases — who have WARN Act claims against the company are out of luck," he said. "It's unfortunate because these companies will not have any money to satisfy them."
The bankruptcy is the latest in a string of legal woes involving Dom’s, Foxtrot and Outfox.
On April 23, the specialty grocers announced it would be shuttering its stores. Former employees said they learned of the mass layoffs and store closures the same day — one Foxtrot vendor said he found out on Instagram.
At the time, Dom’s posted on its website that it was a “difficult decision” and came after the firms explored multiple avenues to keep the businesses open. Foxtrot shared a similar message on its website.
A day after the closures a class-action lawsuit, filed in the Northern District of Illinois, said Outfox, Dom's and Foxtrot violated the state and federal Worker Adjustment and Retraining Notification (WARN) Act by failing to properly notify employees that they would be laid off.
The plaintiff, former Foxtrot employee Jamil Moore, said he learned it was his last day of work “when he was terminated in the middle of his shift around 11:30 am,” according to the lawsuit.
A second class-action lawsuit was filed in April, claiming Outfox “failed to provide 60 days advance written notice as required by the WARN Act.”
The Illinois WARN Act requires employers with 75 or more full-time employees to give at least 60 days’ notice before any mass layoff or closure. The federal WARN Act applies to companies with 100 or more employees.
Dom's and Foxtrot have since filed a WARN notice, notifying the state that it laid off 281 and 66 employees, respectively.
But the lack of notice sparked outcry among some former employees. Last month, about 20 former workers and supporters held a rally outside of the Foxtrot Commissary in Pilsen to demand 60 days of back pay. The workers rights organization Arise Chicago said it worked with some former Foxtrot employees to file charges with the Illinois Department of Labor, which said it's investigating the complaint.
Foxtrot operated 15 locations in Chicago and 17 stores across Dallas and Austin, Texas, and Washington, D.C. Dom’s had two Chicago locations, 2730 N. Halsted St. and 1233 N. Wells St.