Krispy Kreme franchisee files for bankruptcy

WASHINGTON (Dow Jones/AP) — More bad news for struggling doughnut maker Krispy Kreme.

A company that once was the largest franchisee of Krispy Kreme has filed for Chapter 11 protection.

Great Circle Family Foods filed the papers in U.S. Bankruptcy Court in Santa Ana, California, yesterday. The doughnut shop operation says General Electric Capital Business Asset Funding Corporation is its largest secured creditor, with a $7.5 million claim.

Great Circle says it continues to have an unmanageable amount of debt, despite selling a number of ships and significantly cutting debt.

The company and its units own and operate nine Krispy Kreme stores and manage three others, all in Southern California.

Krispy Kreme is based in Winston-Salem.