Foxtrot shutters, then reopens—debts remain unpaid

Foxtrot’s Chapter – Foxtrot’s shutdown in April 2024 left employees and vendors without pay and health coverage, while the company’s Chapter 7 bankruptcy cleared the path for assets to be bought cheaply and the chain to reopen with its original CEO. Two years later, most claims a

On April 23, 2024, Julia posted her first TikTok with a million views—then watched her job disappear in the hours before the screen went dark.

In the video. she is a barista at Foxtrot. the “elevated” convenience store chain with dozens of locations in Chicago. Texas. and Washington. DC. The caption reads: “found out 2 hours before that our company was closing nationwide!!!” Julia shows herself clumsily making what appears to be her last latte. then pans the camera around a store where customers are still sitting with their laptops. “There are all these people here. What do we tell them?” she says.

Her account is tied to a shutdown that arrived fast and without warning. For weeks before it happened, Julia had felt something was wrong. Days earlier, her Foxtrot location in Chicago’s upscale Lincoln Park neighborhood failed a health inspection. The department cited “pink slime build up” dripping into “ice used for human consumption.” Julia said she didn’t understand how anyone could respond: “I was like. is anyone doing anything about this?. Like, who’s cleaning the ice?” she recalled. “Nobody had an answer.”.

Then the company tightened the screws. Two days later, management ordered a spending freeze: employees couldn’t order supplies—not even milk for coffee. And a few days after that. Julia and around 1. 000 employees at Outfox. Foxtrot’s parent company. came in expecting to work their shifts only to be told they wouldn’t be finishing them. The entire company was shutting down due to financial trouble. Staff would have no jobs, effective immediately.

Foxtrot also had millions in unpaid bills. But when vendors tried the company’s emails and phone numbers, they were already disconnected. Former employees later filed a lawsuit against the company for violating the WARN Act. which requires advance notice of mass layoffs. Their complaint sought 60 days of backpay—the amount of notice they believed they should legally have received. Some vendors also sued in an effort to get paid.

Two years on. most of those claims remain outstanding: unpaid bills. the staffers’ WARN Act case. and even equipment that Foxtrot rented but never paid for in full. Yet Foxtrot stores are up and running again. opening shiny new locations in Chicago and Dallas with the same CEO who started the original company. Mike LaVitola.

LaVitola. along with one of Foxtrot’s early VC investors—a firm called Further Point Enterprises that no longer has a website—were able to avoid paying debts “thanks to the Chapter 7 bankruptcy process. ” even as a new version of the business came back. Further Point, Foxtrot, and LaVitola did not respond to detailed requests for comment.

The broader story. as it has played out across the industry. points to a growing pattern: startups backed by venture capital and private equity minimizing debt through bankruptcy and walking away from risky investments with few consequences. Data cited from S&P Global shows that in 2024. a record 110 VC- and PE-backed companies filed for bankruptcy—an increase of 205.5 percent since 2022. when there were only 36 such filings.

For some of those firms. Chapter 7—designed for businesses shutting down for good—has become a way to wipe liabilities with fewer knock-on effects. “I’ve read so many cases of these bankruptcies where they get the liabilities discharged and at the other end is a clean company. ” said Martin Kenney. a professor at the University of California. Davis and coauthor of Private Equity and the Demise of the Local. He argued that the people who absorb the fallout do not get the same reset. “The consequence is that everyone else ends up in hell.” What happened at Foxtrot. he said. “is straight out of the PE playbook.”.

LaVitola launched Foxtrot in 2013 in collaboration with the University of Chicago’s Booth School of Business. where he was a graduate student. The chain began as a food and alcohol delivery app, then—within a year—opened brick-and-mortar stores in Chicago. LaVitola had worked at a private equity firm while getting his MBA and turned to that industry for money to grow.

In the early years, Foxtrot expanded slowly. It received VC funding in smaller rounds—$1 million in 2015 and $6 million in 2018—and opened a store or two a year. But the company’s trajectory changed after it brought in $100 million in VC funding in 2022. Foxtrot announced rapid expansion: 50 new stores in two years. It also promoted plans to triple the size of its engineering staff. upgrade to cashier-less technology. and become a national name.

As that push accelerated, former staff described a different reality inside the stores. Justin Flores. a customer success senior manager. and Abby Stinson. a store manager. were among the former employees who described overspending. Stinson remembered the company spending thousands on custom tables that arrived without a clear plan for where they would go. Eight former store employees. including Stinson. said they had to throw out large amounts of spoiled food because the company didn’t adjust orders to match sales.

In spring 2023, Foxtrot announced it would replace LaVitola with Elizabeth Williams, the company’s CFO and a veteran of major brands like Taco Bell. LaVitola became chairman of the company’s board. Williams did not respond to a request for comment.

Under Williams, the company leaned on cost-cutting that employees say rapidly degraded store conditions. Employees’ $100 a month grocery stipend was taken away across all locations. Some reported broken equipment—refrigerators and dishwashers—wasn’t repaired, and their hours were cut. In July 2023, the flagship Gold Coast store experienced a sewage flood. According to assistant store manager Kyle Caito and two other former employees who shared store photos and staff text messages. a higher level manager didn’t authorize employees to immediately shut down the store even as human feces began to flow across the floor from a drain behind the counter. After cleaning without rubber gloves and protective equipment. they said they were instructed to wipe sewage off High Noon boxes stacked on the floor so the hard seltzers could later be sold.

“We were told, ‘Don’t throw away that stuff because it’s high dollar and they are fast sellers.’ And they ended up keeping those boxes,” Caito said.

Other former employees described similarly grim scenes: at other Foxtrot locations, they said maggots sat in a sink for weeks. They also said management pressured employees to sell expired food, including greyed meat. Twenty-one failed health inspections by Chicago’s health department were recorded, confirming some of these problems.

In November 2023, Foxtrot announced it would merge with Dom’s, a small Chicago-based grocery company, and that both would become affiliates of a new parent entity, Outfox Hospitality.

As the deterioration deepened, rumors circulated that Foxtrot was about to shut down. Another corporate employee said she began receiving many emails from vendors whose bills hadn’t been paid. “That’s when I knew there’s something going on above my pay grade that I have no idea about.”

In March. Outfox replaced Williams with Foxtrot’s second new CEO in a year: Rob Twyman. formerly of Whole Foods Market—signaling continued upheaval. Weeks later, Foxtrot abruptly closed all stores. The company shut off its emails and phone numbers and stopped covering employees’ health insurance. Twyman did not respond to a list of questions from Mother Jones.

For weeks, management was silent in public. Former vendors and industry insiders speculated about bankruptcy. Instead of a clear explanation, Foxtrot held a virtual liquidation auction on May 10. Marc Nathan. an expert in the Consumer Packaged Goods space. observed the auction to understand what Foxtrot was selling and who was bidding. Nathan said it appeared that an “inside deal” had been arranged before the auction began. He said nobody had a chance to bid and the facilitator announced that Further Point Enterprises would purchase the assets.

Further Point bought Foxtrot’s assets for $2.2 million. Observers were surprised by the low price. Nathan said. and he added that it also wasn’t clear which assets were being sold. When Foxtrot declared Chapter 7 bankruptcy just a few days later, filings valued Foxtrot’s assets at $10 million to $50 million. It remains unclear whether what was sold at auction was included in that valuation. Further Point and Foxtrot did not respond to questions about the auction sale price.

Within months, Foxtrot reopened—with Further Point as its parent company and LaVitola reinstated as CEO.

The sequence matters for legal reasons. Two law professors specializing in bankruptcy—Rafael Pardo at Washington University and David Carlson at Yeshiva University—said the auction and the collaboration that followed could allow Further Point and LaVitola to be held liable for the original Foxtrot’s debts in the future. Whether a “new Foxtrot” could be liable would be decided by courts if creditors sued.

Pardo and Carlson said a judge might find the auction “collusive” because it appears pre-arranged: it happened months before Further Point and LaVitola partnered again. and participants didn’t get a chance to bid. Instead of pushing sale prices to maximize money for creditors. the structure seemed to benefit Further Point and LaVitola—enabling them to build a new version of Foxtrot unencumbered by old debts.

Outfox’s decision to file for Chapter 7 also mattered. Chapter 7 is for companies shutting down for good and assumes limited money to repay debts. Businesses looking to keep operating while relieving debts are supposed to file under Chapter 11. a costlier and lengthier process in which creditors and bankruptcy judges get more say.

Yet two weeks after Outfox and Foxtrot filed for Chapter 7, Further Point obtained the leases for six of Foxtrot’s former stores—an early sign that the investors might be trying to revive the business. A week later, LaVitola announced exactly that: the arrival of “Foxtrot 2.0.”

In a June 5 interview with ModernRetail. LaVitola said he would be reviving Foxtrot as CEO with Further Point as the new parent company. He also described a version of events in which he claimed he was uninvolved with Foxtrot long before the trouble began. He said that when the company shut down. he was “in a similar situation to a lot of our team members. ” discovering things “in real time.” He called it “really. really shocking and really just awful to see the way everything happened.” LaVitola said that by the time Foxtrot shut down. he’d been sidelined and was no longer on the board.

He said he hesitated to reopen when Further Point approached him but went forward “for altruistic reasons. ” arguing reopening “benefitted a heck of a lot more people than the company not existing.” He later posted a cryptic Instagram post with a sunset on Foxtrot’s old. now scrubbed account that read: “A new Foxtrot with some old friends.”.

LaVitola, in his public messaging, said little about the WARN Act lawsuit, the employees left without health insurance, or vendors with unpaid invoices. He also distanced himself from the original Foxtrot.

But documents uncovered show his role may have been deeper than he portrayed. His statements. the article reports. suggest he tried to minimize his role at the company when it shut down—potentially to control his reputation in Chicago. where many were livid about how Foxtrot handled the shutdown. and potentially for legal reasons. The depth and timing of his involvement could influence whether his new company can be held liable for the original Foxtrot’s debt. Pardo and Carlson said. Foxtrot and LaVitola did not respond to questions about his company role when Foxtrot shut down.

Filings from Foxtrot’s bankruptcy and a lawsuit complicate the picture. In those documents. LaVitola’s statements are paired with other evidence: in a statement filed as part of a case in which a food supplier sued Foxtrot and LaVitola for $700. 000 in losses. LaVitola said he was still serving on Foxtrot Ventures’s board as a “non executive chairman. ” a position that would have required him to know the company’s financial state. Bankruptcy documents. the article says. support that he was paid as a “director”—board member terminology—at Foxtrot right up until the company shut down in April 2024.

Interviews with former corporate employees also suggested LaVitola remained on Foxtrot’s board after the merger into Outfox. One former Outfox employee described a pattern: “We had to be in the office for three days a week. And of those days he was there, like he was in the office regularly. He was taking meetings. He was talking to the merchants. He was still involved.” The employee said there was a window that let people see into the conference room and that LaVitola continued to attend executive meetings even after the merger in late 2023. Flores confirmed “he was in that office all the time.”.

Judges, the article notes, also look at whether a new company closely resembles the one that filed for Chapter 7—sharing executives, assets, and locations. When that resemblance is too tight, bankruptcy protections can be harder to keep.

In Foxtrot’s case, the distance from the old work was minimal. Many of the new Foxtrot’s first stores were in old Foxtrot locations and used old Foxtrot assets purchased in auctions. Foxtrot kept the same name and kept both founders on its executive team: LaVitola and his co-founder, Taylor Bloom. Bloom did not respond to a request for comment.

The reopened stores appear to be thriving. The company reopened ten of its old locations—two in Dallas and eight in Chicago—as well as a new-build location in Chicago’s Lincoln Park. Customers are full of “well dressed folks sipping wine and coffee and working on laptops.” LaVitola gives interviews about values and teamwork and says he will take a “more measured. methodical approach.”.

But for creditors, the shutdown didn’t erase what they were owed. Most of Foxtrot’s old vendors still haven’t been paid. Bankruptcy filings show Foxtrot owed nearly $25 million to creditors at the time it shut down. The bankruptcy paused the WARN Act lawsuit filed by former employees, meaning they have yet to receive backpay.

The Foxtrot story isn’t the only one. The CEO of Massachusetts-based start-up Next Level Pizza formed a new company to buy his old company’s assets in a liquidation sale before filing for bankruptcy. When Underground Cellar. a wine startup. declared Chapter 7. its founder tried to transfer the company’s key assets—half a million bottles of wine—back to himself. In both cases, courts stopped the transfers.

In Foxtrot’s case, the article says judges haven’t spoken publicly about the asset sale to Further Point or whether the new Foxtrot is too similar to the old one. That means many creditors could still try to claw back money from the new company.

The legal scrutiny may be increasing. The article notes that some bankruptcy judges are becoming more aware of companies that use the system to stave off big debts. It also says the Ninth Circuit Court of Appeals recently issued a ruling meant to expand bankruptcy court powers to stop certain asset transfers that help bankrupt companies avoid paying creditors. It further says private equity firms appear to be adapting: last year the number of PE-backed firms that filed for bankruptcy dipped slightly. as more opted for private restructurings and lines of credit instead of bankruptcy court and the publicity of open hearings.

For now. LaVitola is free to open more stores—with the same name. in the same city—without the old company’s money problems weighing on the new operation. But he may not be able to shake the question that has hung over the chain since the moment Julia and thousands of employees found out their shifts were over: whether debts can be truly wiped clean when the company that reopens looks and feels like the one that shut down.

Foxtrot Outfox Hospitality Chapter 7 bankruptcy WARN Act venture capital private equity Mike LaVitola Further Point Enterprises food safety inspections unpaid bills