A federal judge in Burlington has found that the investors who purchased Koffee Kup bakery violated federal labor law when they fired about 300 workers without notice.

Judge William K. Sessions III ruled that the company that purchased Koffee Kup, Vermont Bread, and other companies operating under the Koffee Kup name were obligated to give employees notice before they decided to close in April 2021.


The 80-year-old Koffee Kup had been delivering bread, buns, English muffins and doughnuts to more than 4,500 locations in the Northeast before it closed. It employed more than 150 people at its Burlington bakery, nearly 100 in Brattleboro and another 50 in Connecticut.



Workers learned of the closure when they showed up for their shifts on April 26, 2021. Days later, they filed a complaint in U.S. District Court alleging the owners had violated the WARN Act.
Employers who violate the WARN Act are liable for an amount equal to back pay and benefits for up to 60 days. No penalties have been set in the Koffee Kup case; those will be determined at a hearing later, according to Stuart J. Miller, a New York-based attorney who represents the former Koffee Kup employees. Miller said he’d be asking for 60 days' pay for all of the workers, plus damages and lawyers’ fees, a total he estimated is approximately $3.6 million.

He doesn’t expect the payout to be that high, though.

“It’s like a bankruptcy; there’s only going to be between 20 cents and 40 cents on the dollar to pay the employees,” Miller said.

Koffee Kup's abrupt closure stunned the company’s longtime neighbors in a well-traveled section of Burlington and saddened the many who had come to rely on the company's locally famous cinnamon-sugar cruller. American Industrial Acquisition Corporation had purchased Koffee Kup on April 1, 2021, and had described its plans to grow — not close — the business.
But AIAC soon discovered that Koffee Kup was in much worse financial shape than expected.

Jeffrey Sands, a Vermont-based adviser to AIAC, learned on April 5 that the company’s gross sales were nearly $1 million below the company’s budget. Financial information had been withheld before the sale, Sands said in court papers, and it would take $10 million to restore the company to profitability.

The company filed a WARN notice on April 26, the day of the closure, writing to the Vermont Department of Labor that Koffee Kup had been losing money for years and that its lender had declined to float additional cash or extend a forbearance agreement.

In his decision, Sessions granted the former Koffee Kup employees summary judgment, meaning the case won't need to go to trial.
Koffee Kup was purchased six weeks after the closure by Flowers Foods, a publicly traded Georgia-based company that makes Wonder Bread and other well-known brands. Flowers Foods did not reopen Koffee Kup’s factories in New England.

The bakery property in Burlington was purchased by an Arizona company last year and demolished.