Dom’s, Foxtrot parent files for bankruptcy in wake of abrupt closure

Foxtrot and Dom’s parent company Outfox Hospitality filed for bankruptcy Tuesday, weeks after the companies abruptly shuttered all stores.

Outfox, the parent of both companies since they merged nearly six months ago, filed for Chapter 7 bankruptcy liquidation in Delaware. In court documents, Outfox estimated no funds would be available to pay unsecured creditors after administrative costs were paid. The company estimated its assets at between $10 million and $50 million, and estimated its liabilities to be worth the same.

Foxtrot had 33 stores, about half of which were located in Chicago, while Dom’s had two locations, one in Lincoln Park and one in Old Town. All the stores closed suddenly April 23; some employees told the Tribune they learned they were out of jobs in the middle of their shifts that day.

Three lawsuits were swiftly filed against the company in federal court in Chicago alleging violations of the federal and/or state Worker Adjustment and Retraining Notification Acts, both of which require 60 days’ notice for mass layoffs by certain large employers. The Illinois Department of Labor said it had received a complaint about the closures and had opened an investigation into whether the company had violated the state WARN Act.

FAQs provided to workers said they would only be paid through the date the stores closed. The lawsuits filed against the company seek back pay for laid-off staff.

Outfox filed state WARN notices the day after it closed down. Those notices listed 281 affected workers at the North Side Dom’s locations and 66 employees at Foxtrot’s 167 N. Green St. offices. It was unclear if the Foxtrot layoff notice included workers at any retail stores.

It’s not clear whether or how the bankruptcy petition could affect the workers who are seeking back pay under the WARN Act.

Bankruptcy doesn’t absolve companies of their responsibilities under the WARN Act, said Kurt Carlson, managing partner at Carlson Dash in Chicago, but “if there’s no money, there’s no money.”

If the WARN claims are found valid, said Mark Melickian, a partner at Raines Feldman Littrell who has represented companies and creditors in bankruptcy cases, they could be given priority over claims from other unsecured creditors, such as claims from suppliers — if there is still cash left to go around.

‘It’s very fact-specific and it can depend on the judge,” he said.

Whether or not some or all employee claims are given priority status, they would still come after any secured debt claims, Melickian said.

The company is also facing a lawsuit from suppliers Anthony Marano Co. and Market Cuts LLC, which allege Dom’s failed to pay them for $208,000 worth of products.

In a statement, the U.S. Department of Labor said WARN remains applicable to employers that have filed for bankruptcy “in some circumstances” and that it could not provide guidance about individual situations under the law. IDOL said it would work with the state attorney general’s office to “attempt to recover any monies due to impacted workers, whether or not a company files for bankruptcy protection.”

Former Foxtrot and Dom’s executives have not responded to the Tribune’s requests for comment since the closures. A source familiar with the company’s prior expansion plans, however, previously told the Tribune that Outfox had been meeting with investors, landlords and bankers in the weeks leading up to the closures in hopes of staying afloat.

Before merging, both companies had explored expansion plans. Foxtrot, founded as a delivery-only service by Mike LaVitola, announced a few years ago that it planned to open more than 60 stores by the end of 2022, about half the number it had upon closing down.

Dom’s, a project of Chicago grocery scion Bob Mariano and former Dominick’s executives, previously said it planned to open 15 Chicago-area stores by 2025.