A family-owned baking company based in Canada says it expects to purchase the assets of the recently shuttered Koffee Kup Bakery, bringing hope for dozens who abruptly lost their jobs last month.

Mrs. Dunster's Bakery — a New Brunswick baked goods distributor — announced its intentions in a press release on Thursday, saying it was facilitating the purchase through the newly-formed North Atlantic Baking Company, which will be based out of Burlington.

"We have been advised that North Atlantic Baking Company is the preferred purchaser of the Koffee Kup assets and we are focused on moving quickly to conclude negotiations which will lead to restarting operations very soon," wrote Blair Hyslop, who co-owns and runs Mrs. Dunster's with his wife, Rosalyn, in the release. VTDigger.org first reported the news.

The likely new owners say they are now negotiating a lease with a court-appointed receiver and hope to have it completed within the next few days. They said they plan to resume operations at Koffee Kup's two Vermont bakeries while they try to sell off a third facility in Connecticut.

"The lease agreement will allow us to quickly get employees back to work and products back on the shelves while we work through the formal transferring of assets, the details of which have been largely agreed to," Hyslop wrote.

The company's announcement came just hours after Mrs. Dunster's received approval to participate in the Vermont Employment Growth Incentive program, which promises state payments in exchange for job creation and capital investments. Beyond the potential total incentives — up to $580,000 for the Burlington location and up to $1.2 million for the Brattleboro one — terms of the agreements are confidential. The payments begin only after the state tax department confirms compliance with the agreement.
Koffee Kup and its Brattleboro-based subsidiary, Vermont Bread Company, abruptly laid off about 250 people across the two locations late last month, citing mounting debt. The move came just weeks after private-equity firm American Industrial Acquisition Corporation purchased the company.

One former employee went on to file a $5 million class-action lawsuit alleging the company failed to give proper notice for the closure, while Vermont Attorney General T.J. Donovan filed court papers last week urging that employees receive the $800,000 in accrued time off that they were owed.

Shortly after the closure, KeyBank sued Koffee Kup for breach of contract, writing in court filings that the company still owed more than $7 million in loans.

A court-appointed receiver, Ronald Teplitsky of  Next Point, confirmed for Seven Days on Thursday that his group was working with a "preferred candidate" on the "disposition" of Koffee Kup's assets. He declined further comment when asked why Mrs. Dunster's was chosen over other potential buyers, saying it was "a bit premature."

"I’m just not in a position to talk at this point," he said.

Mrs. Dunster's, which brands itself as Atlantic Canada's largest family-owned bakery, has been on an expansion kick as of late. The company has been growing at a rate of 30 to 40 percent annually over the last five years and recently opened a new 37,000 square-foot bakery in New Brunswick, Hyslop told business publication Huddle last November.

The company emerged from a crowded field of potential buyers interested in Koffee Kup. Earlier this month, Massachusetts-based East Baking Company sought and earned approval for up to $2.4 million in VEGI money to reopen the shuttered plants. In a statement, East Baking's vice president, Jeff McCarroll, questioned the state's decision to grant incentive money to a foreign company.
"We find it unusual that a Canadian company heavily subsidized by the Canadian Government would be subsidized by the state of Vermont to purchase an iconic American brand," McCarroll wrote.

For their part, Koffee Kup's likely buyers appear to be emphasizing continuity, writing in their press release that they "will continue to market the same baked goods that made the company a household name throughout New England."

“Despite the recent history, Koffee Kup Bakery and The Vermont Bread Company have a strong brand presence," Hyslop wrote. “We intend to continue their tradition of delivering high quality breads, rolls, English muffins and donuts to our loyal customers, while at the same time helping the company meet its full potential.”