Dippin’ Dots Bankruptcy: Ice Cream of the Past?
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Dippin' Dots Bankruptcy: Ice Cream of the Past?

November 11, 2011

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Dippin’ Dots, the company responsible for the small ice cream beads it advertises as the "ice cream of the future" has filed for Chapter 11 bankruptcy protection in Kentucky’s Western District, according to CNN.com.

The company, which often sells its product at sporting events, in shopping malls, and at amusement parks, apparently filed its bankruptcy petition when it could not come to a payment agreement to settle a debt of about $11.1 million with Regions Financial. The financial organization apparently threatened to foreclose on the debt, which led Dippin’ Dots to seek bankruptcy protection.

According to bankruptcy court documents, Dippin’ Dots has a total of about $12 million in liabilities and frozen assets of more than $20.2 million, $3 million of which is ice cream inventory.

Company sources have reported that the business will “absolutely” stay open and continue operating its storefronts, which it claims will not be directly affected by bankruptcy proceedings. While the exact factors that triggered the bankruptcy filing are unclear, some analysts are suggesting that the economic downturn, which has led to decreased discretionary spending at venues where Dippin’ Dots products are often sold, could be partly to blame.

As the case progresses, the bankruptcy judge has ruled, the company may use its cash collateral to continue operations. Company leaders have indicated that the bankruptcy will affect only the manufacturing and national sales components of the company.

Triggered by a Lawsuit

The first stirrings of financial troubles for Dippin’ Dots came in February of this year, when the Alabama-based Regions Financial filed its suit over unpaid debts. As in personal bankruptcy, business bankruptcy can halt debt-related lawsuits while the case is pending.

In 2009, Dippin’ Dots indicated that its income totaled $33.8 million; in 2010, it brought in $26.7 million; and as of September 2011, it has earned $27.7 million. Dippin’ Dots was founded in 1988 with what its company website refers to as "cryogenic technology,” which allows ice cream balls (stored at - 40 degrees Fahrenheit) to maintain their distinct shape throughout the storage and serving process.

The company is based in Paducah, Kentucky.

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