As a doughnut invader from the south prepares its sweet assault on the city with a Capitol Hill beachhead, a veteran of Seattle’s fried dough scene is financially struggling.

Federal court documents show Mighty-O Donuts filed for Chapter 11 bankruptcy protection in July in a case where the filings continue over the more than $1 million in liabilities the small Seattle company carries.

CHS has asked the company for more information about its future and its employees after the filing that came as Might-O founder Ryan Kellner saw profits at his four cafes and production facility dip to near zero this summer.

In its filing, the company blames the pandemic and national economic issues for its troubles saying “a combination of factors, including the adverse effects of the pandemic, increased costs due to inflation, decreased sales, and high fixed lease costs” led to the bankruptcy.

“Mighty-O experienced modest growth for many years until the COVID-19 pandemic in
2020,” one document reads. “The pandemic severely impacted Mighty-O’s ability to operate a financially sound business. The company experienced a significant drop in customer traffic and a decrease in employee availability, preventing it from operating at full capacity. Additionally, Mighty-O faced major disruptions in supply chains, vendor services, and rising costs due to inflation.”

In its filings, Mighty-O has documented liabilities of more than $1 million against assets that nearly match. Part of the Chapter 11 filing including analysis that showed creditors would be better served by continuing to operate the company under bankruptcy protection than to liquidate Mighty-O’s assets.

Under the plan, Mighty-O said it was establishing a new, more company-friendly lease for its 2nd Ave location and cutting other expenses, while using “the resulting cost savings to pay creditors.” Included on the list are major loans from Umpqua Bank and the U.S. Small Business Administration.

Customers are also being considered. One of the most recent filings this month approved a motion authorizing payment “or honoring of prepetition obligations to gift card holders.”

According to the filings, Mighty-O still has 17 months on its lease for its Capitol Hill cafe in the Trace Lofts building at 12th and Madison. CHS reported here in 2015 as the organic and vegan-friendly doughnut maker took over the space formerly home to High 5 Pie.

Now, as it approaches ten years in the neighborhood, Mighty-O is working to stabilize its business. Meanwhile, Capitol Hill’s doughnut economy is gaining a huge new player. Capitol Hill’s 24-hour Voodoo Doughnuts is finally ready for its debut.

UPDATE 12/5/2024: Mighty-O’s Ryan Kellner sent over a statement on the company and how it is getting back on stable financial ground through the bankruptcy process:

Since we filed in July, we’ve been working hard to restructure the business, trim expenses, and position ourselves for a stronger future. Chapter 11 allows us to continue operating while addressing financial challenges, and we’re already seeing progress. For instance, we made the tough but necessary decision to close our Stewart and Boren location, which was our biggest operational challenge. We’ve also renegotiated leases and contracts that were unfavorable, and we’ve restructured our debt to create a more sustainable financial foundation.

We’re already on much better footing. While this has been a challenging process, it’s also an opportunity to strengthen Mighty-O for the long term. We expect to successfully reorganize and emerge from bankruptcy by the first quarter of next year, ready to serve the community as one of Seattle’s favorite donut makers.

Our Capitol Hill café remains open, and we’re continuing to serve customers and take care of our employees.

“Bankruptcy isn’t the end of the road—it’s a tool for businesses to get back on track, and we’re committed to coming out of this process even stronger,” he writes. “We are grateful for our community’s continued support as we navigate this path forward.”

Mighty-O Donuts is located at 1400 12th Ave. Learn more at mightyo.com.

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