- Jack’s Donuts’ commissary filed Chapter 11 on Oct. 24, with liabilities over $14 million and under $1.5 million in assets.
- The Commissary pivot (centralized baking) led to poorer donut quality, lost customers, and franchisee revolts demanding CEO resignation.
- Bankruptcy affects only the commissary; shops remain open as franchisees resume in-store baking to rebuild trust.
For generations of Hoosiers, nothing beat the fresh-baked aroma wafting from a Jack’s Donuts shop—glazed, cake, or those signature twists that made early mornings feel like a treat.
But this week, the New Castle, Indiana-based chain that’s been frying up favorites since 1961 hit a sour note: its production arm filed for Chapter 11 bankruptcy protection.
The filing by Jack’s Donuts of Indiana Commissary LLC came on October 24 in the U.S. Bankruptcy Court for the Southern District of Indiana (Case No. 25-773353).
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It’s a Subchapter V case, designed for small businesses to reorganize without fully shutting down.
Court documents paint a grim picture: liabilities topping $14 million against assets of less than $1.5 million in personal property.
A Recipe for Trouble: The Commissary Gamble
It all traces back to October 2023, when CEO Lee Marcum—a third-generation owner—opened “The Commissary,” a centralized production and distribution hub in New Castle.
The idea? Streamline operations by having franchisees ditch in-store baking and buy donuts wholesale from corporate. Many sold off their ovens, laid off bakers, and geared up for efficiency.
But customers noticed. Fast. “The donuts weren’t great,” said franchise owner Angi O’Connell Bone in a heartbreaking interview with local reporters.
“We lost customers when we changed over, and they compared us to a gas station donut. That was heartbreaking.”
Sales tanked. Over the next 18 months, franchisees watched revenue and loyalty crumble. By January 2025, owners of 18 locations fired off a blistering letter to Marcum: “The ongoing mismanagement, coupled with troubling financial actions, has not only directly impacted our operations but has also led to a broader loss of confidence in the company’s future.”
They accused him of misappropriating funds, financial mismanagement, and spinning up side entities for personal gain—demanding his resignation.
The hits kept coming. Suppliers sued over unpaid bills. Old National Bank foreclosed on a $2.9 million loan tied to the commissary property. Judgments piled up: $292,768 from Avanza Capital, $104,995 from Specialty Fitters, and more, totaling over $500,000 just this year. Even the Indiana Secretary of State slapped a cease-and-desist in May for peddling unregistered securities.
Franchises Fight Back, Stores Stay Open (For Now)
Here’s the silver lining for donut fiends: the bankruptcy covers only the commissary entity, not the 24 shops across Indiana (14 franchised, 10 corporate-owned).
Franchisees have already pivoted—renting kitchens, buying gear, and baking in-house again to win back taste buds.
A company spokesperson insisted via Facebook: “We have plans for continued and uninterrupted future operations… Our stores remain open, our teams are at work, and our commitment to quality, tradition, and community remains unchanged.”
Local outlets like WISH-TV and FOX59 echoed that, with franchise spots in Richmond, Franklin, and Greenwood confirming business as usual.
Echoes Across the Midwest—and Online
The news rippled fast. Mashed called it a shocker for a “pretty reliable American favorite.”
The US Sun dubbed the chain “beloved” after six decades.
On X, reactions ranged from shock—”Ah man, Jack’s Donuts filed for Chapter 11″—to gallows humor: one user lamented it alongside a jammed finger and MTV cancellations. Local reporters like Kara Kenney at WRTV broke the story early, noting the commissary’s role in the mess.
FOX59 and CBS4 Indy followed with updates, stressing no store closures.
Can They Glaze Over This?
Chapter 11 gives breathing room—a trustee will oversee restructuring, potentially slashing debts while keeping lights on.
But experts know the risks: franchisees are exposed if the brand craters, and rebuilding trust after “gas station” donuts won’t be quick.
For now, Marcum’s taking the heat. As one X post from bankruptcy watchers put it, this is the “collapse of the company’s strategic pivot.”
Donut lovers, grab ’em while they’re hot—the future’s anything but certain.
Also Read: A Massive Convenience Store Now Closes 500 Stores
