By Harshit, INDIANAPOLIS, Nov. 1, 2025 7:15 AM EDT
Jack’s Donuts of Indiana Commissary LLC, the production and distribution arm of the well-known donut franchise, has filed for Chapter 11 bankruptcy, court documents show. The filing, made on October 29 in the U.S. Bankruptcy Court for the Southern District of Indiana, marks the latest financial and legal setback for the once-expanding donut chain.
A Growing Financial Crisis
According to the bankruptcy petition, the company has more than 100 creditors and $14.2 million in liabilities, with just $1.4 million in total personal property assets. The filing comes after months of civil lawsuits, unpaid invoices, and state-level scrutiny surrounding the business dealings of CEO Lee Marcum and his affiliated companies.
In October 2023, Jack’s Donuts opened its commissary facility in New Castle, intended to centralize production and streamline supply for dozens of franchise locations across Indiana. However, just a year later, that facility now finds itself at the center of a major financial reorganization.
“The goal of Chapter 11 is not liquidation but reorganization,” explained Nicholas Georgakopoulos, a business law professor at IU McKinney School of Law. “Reorganization should be thought of as restructuring ownership and debt — changing who owes what, rather than shutting everything down.”
Mounting Debts and Legal Judgments
The company’s creditor list includes multiple firms with existing judgments. Carter Logistics, a trucking company that sued over $769,000 in unpaid delivery invoices, is among them. The filing also notes a $3.5 million judgment in favor of Old National Bank.
Other creditors include former franchise owners and suppliers. Angi Bone, previously a franchisee in Fishers and Gas City, is listed with a $40,000 claim. Bone has since rebranded her stores as Boomtown Donuts after parting ways with the chain earlier this year.
Meanwhile, franchise owners Donna and Paul Ganote, who operate Jack’s Donuts stores in several Indiana towns, including Brownsburg, Franklin, and South Bend, emphasized their independence. “We are a franchise and have never been a part of the commissary or affiliated in any way,” the Ganotes wrote in a Facebook post. “Our stores are alive and well, continuing to make handcrafted donuts every day.”
The main Jack’s Donuts website is currently inactive, and attempts by WRTV Investigates to contact Marcum or his bankruptcy attorney for comment have gone unanswered.
Linked Companies Also File for Bankruptcy
Alongside Jack’s Donuts of Indiana Commissary, two other Marcum-connected companies — Marcum Industries LLC and KCL Group Inc. — also filed for Chapter 11 bankruptcy on October 29. Together, the filings reflect a widening financial collapse within Marcum’s business network.
Cease and Desist Order Adds Legal Pressure
The financial troubles come amid an ongoing state investigation into Marcum’s business practices. On May 5, 2025, the Indiana Secretary of State’s Securities Commissioner issued a cease and desist order against Marcum and his companies for allegedly offering and selling unregistered securities in violation of the Indiana Uniform Securities Act (IUSA).
According to the order, Marcum and his firms unlawfully offered an unregistered security to one investor in June 2024 and sold another to a different investor in September 2024.
“This is a very substantial development,” said Steven Sibley, associate chair of finance graduate programs at the IU Kelley School of Business. “It’s highly uncommon for companies to attempt to issue unregistered securities. This order is about protecting the public and potential investors.”
State officials confirmed that the investigation remains active. “An investigation is ongoing,” said Lindsey Eaton, communications director at the Indiana Secretary of State’s office.
The cease and desist order requires Marcum and his businesses — including Jack’s Donuts of Indiana Commissary LLC, Marcum Industries, and KCL Group — to immediately halt all securities sales and related activities within the state.
A Brand in Decline
Once celebrated as a growing Indiana success story, Jack’s Donuts had 24 locations and 14 franchisees at its peak, according to company records earlier this year. But recent months have brought a cascade of financial setbacks, investor lawsuits, and now bankruptcy filings that threaten to dismantle what was once a thriving regional brand.
“It’s not just about one store — it’s about a network that’s been destabilized,” said one local franchise owner who requested anonymity. “Everyone’s waiting to see what the court will decide and whether the brand can recover.”
For now, franchise operators unaffiliated with the commissary continue to serve customers, even as the company’s leadership faces growing scrutiny and mounting debt.