INDIANA, United States — Jack’s Donuts of Indiana Commissary LLC has filed for Chapter 11 bankruptcy, according to documents submitted on October 29 in the U.S. Bankruptcy Court for the Southern District of Indiana.
The filing is the latest development amidst ongoing civil lawsuits, financial judgments, and a regulatory investigation targeting CEO Lee Marcum and his associated businesses.
The commissary, a production and distribution center opened in New Castle in October 2023, is now seeking court supervision to reorganize its finances rather than liquidate entirely.
Nicholas Georgakopoulos, a business law professor at IU McKinney Law School, explained the nature of Chapter 11:
“Typically, there will be an effort to make the business more effective. So there will also be a reorganization of the business. Reorganization should be thought of mostly as a reorganization of ownership and debt. It might be that only the obligations and the ownership change.”
Financial Liabilities and Creditors
The bankruptcy filing indicates that Jack’s Donuts of Indiana Commissary has more than 100 creditors and approximately $14.2 million in liabilities, against $1.4 million in personal property assets.
Notable creditors listed in the filing include:
- Old National Bank, holding a $3.5 million judgment.
- Carter Logistics, a trucking company that previously filed a lawsuit alleging non-payment for donut deliveries.
- Angi Bone, a former franchisee who sold her Fishers and Gas City locations and has a claim of $40,000.
Two other entities connected to CEO Lee Marcum—Marcum Industries and KCL Group—also filed for Chapter 11 bankruptcy on the same date.
Marcum and his attorney have not responded to requests for comment, but a statement was issued on the company’s Facebook page:
Franchisees insist on independence
Following the news, several Jack’s Donuts franchise owners publicly distanced themselves from the centralized company unit. Donna and Paul Ganote, who own and operate six locations, posted a clarification on social media:
“We are a franchise and have never been a part of the commissary or affiliated in any way, that is NOT us,” said the Ganotes in a Facebook post. “Our franchises are alive and well, continuing to grow. We appreciate everyone reaching out, just wanted to make sure you know our stores have always and will continue to make handcrafted donuts every day!”
Regulatory and securities violations
The bankruptcy filing follows a cease and desist order issued by the Indiana Secretary of State’s Securities Commissioner, a document that first publicly confirmed a government investigation into Marcum’s business practices.
The order, effective May 5, alleges that Lee Marcum, Jack’s Donuts of Indiana Commissary LLC, Marcum Industries LLC, and KCL Group Inc. violated the Indiana Uniform Securities Act (IUSA).
The document outlines two alleged violations from 2024:
- Count 1: In June 2024, Marcum and his businesses unlawfully offered an unregistered security to Investor MD.
- Count 2: In September 2024, Marcum and his businesses unlawfully offered and sold an unregistered security to Investor AB.
Securities, defined by Steven Sibley, an associate chair of finance graduate programs at the IU Kelley School of Business, as “an instrument that provides investors claims on future cash flows,” must be registered with the state unless exempted.
The Secretary of State’s office mandates registration for “the protection of Indiana investors,” allowing them “to have access to any and all information necessary to make informed investment decisions.”
Lindsey Eaton, Communications Director at the Indiana Secretary of State, confirmed that “An investigation is ongoing.”
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The cease and desist order requires Marcum and his businesses to immediately cease all acts violating the IUSA, including the further offer or sale of securities.
Steven Sibley commented on the significance of the order:
“This is a very substantial development. It would be very uncommon for companies to even try to issue unregistered securities.”
He added: “This order is largely about protecting the public. Any member of the public is a potential investor, so it’s about protecting investors first and foremost and anybody who could buy or be sold financial securities.”
Though Marcum has repeatedly declined interview requests, he previously stated via email that the ongoing news investigation had caused undue stress:
“The stress and disruption caused by this news investigation, led by Kara Kenney, have placed an undue burden on our franchisees, employees, their families, and our investors—at a time when stability is critical to our organization,” said Marcum in an emailed statement on June 3.
“We want to be clear: our leadership team is fully engaged in managing our company. Engaging with the media on this matter is not something we are prioritizing at this time, nor is it a distraction we can afford. We will not be providing any comment on internal matters.”
