Labor and supply issues are being cited as key factors in the November 2021 Chapter 7 bankruptcy filing of baked goods manufacturer The Muffin Mam, Inc. — leaving them over $500,000 in debt to contractors they still can’t pay.
The company owes a total of $539,025.06 to contractors based in the southern part of the US. A large part of this debt stems from the company’s opening of a second production facility for its “portfolio of muffins, ring cakes, pound and loaf cakes, and brownies” — one which cost the company $18.8 million to build.
But this isn’t the first time that the facility’s construction has shown signs of problems: Current debtee JWC Environmental filed a lien for $1,077,095 against the project in May 2020, but this lien was released in July 2020.
However, the company now lists $5,991,548.58 in total debts, which is a major issue for the group of contractors looking for repayment.
Muffin Mam’s bankruptcy filing lists less than $50,000 in total assets, and its filing notes that no funds will be available to unsecured creditors after administrative fees have been paid. Given that the company also owes tax agencies in Greenville County and Laurens County — as well as the Internal Revenue Service — it’s unlikely that that money will find its way to most of the creditors.
Like many problems being faced by contractors right now, the Muffin Mam is citing the effects of the COVID-19 pandemic as a main instigator of the problem.
In a statement, the company pointed to the “ongoing effects of Covid-19” as a major factor, acknowledging that its newly built facility couldn’t further build on positive momentum due to the pandemic.
“After Muffin Mam commissioned a new facility in early 2020, initial lockdowns related to the pandemic greatly limited customer interactions, which negatively impacted new revenues,” the statement said.
The ongoing labor shortage that is plaguing the construction industry is having an impact on this case as well. Muffin Mam cited problems with labor as being a factor in the bankruptcy and a source that drained the company’s finances, which will ultimately impact the ability of the company’s construction creditors to be paid.
Given the extremely limited assets that Muffin Mam has to work with, these claims only put further financial pressure on the company, which continues to keep it from being able to pay its debts to contractors.