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Bagel maker in the hole
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November 19, 1997: 12:15 p.m. ET
Manhattan Bagel files Chapter 11; seeks new CEO, may cut HQ staff
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NEW YORK (CNNfn) - Manhattan Bagel Co. filed for Chapter 11 bankruptcy protection Wednesday and announced a management reshuffling, but said it has no plans to stop making dough.
The Eatontown, N.J.-based company, which distributes bagel dough to 360 franchises in 19 states and operates three manufacturing plants, will immediately begin searching for a new chief executive officer to revamp lagging results.
A statement also indicated that co-founders Jason Gennusa, Andrew Gennusa and David Goldsmith will assume different roles from their current senior management positions after the reorganization. It didn't say what those roles would be.
"We are convinced that Manhattan Bagel Co. has a viable core business," the statement said. "We believe this company can once again become a financially viable organization."
Bankruptcy comes less than one week after the bagel maker warned that third-quarter losses could exceed $1.75 per share, weakened further by a $12.6 million charge.
As part of the reorganization, company officials said they might sell or close company-owned stores that have been a major drag on resources. About 9 percent of Manhattan Bagel stores are owned by the company. Officials also said they are considering staff cuts at their headquarters along with a full review of the work force.
Manhattan Bagel currently has about 570 employees, according to recent company filings. It reported a $7.5 million net loss in 1996 on sales of $36.9 million. The company said it has assets valued at $40.8 million and liabilities of $19 million.
Shares and Manhattan Bagel (BGLS) were halted on the Nasdaq Stock Market. The stock started the day near a 52-week low at 97 cents a share and well below the 52-week high of $10.
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