LETTERS

More on Ample Hills

Nice article, glad someone is shining a light on this. There is something even more insidious/newsworthy here, but first a correction: the standalone ice cream business was not generating cash flows that were helping to stem losses across Schmitt, it itself was burning cash because the factory was too large for the amount of ice cream it could sell. The only option was to grow its way out of trouble, which it couldn’t do fast enough. However, here’s the dirty bit: Schmitt is controlled by an activist hedge fund manager named Mike Zapata, who bought control of the company before it acquired Ample Hills out of bankruptcy (his hedge fund, Sententia Capital, owned ~10% of Schmitt). When it became clear he couldn’t turn around Ample Hills fast enough to stop the bleeding, he made a tiny loan from his hedge fund ($1M) so that he could effectively put Schmitt/Ample Hills back into bankruptcy and take 100% control as the sole creditor (don’t think it’s happened yet, but assuming it’s imminent) wiping out the majority of shareholders. He did this to save his reputation with his hedge fund’s investors, including billionaire Mario Gabelli, at the expense of the Ample Hills brand, the employees, and the other shareholders. Zapata received offers to help finance the business and keep it alive, but it would have cost him control and would’ve wiped out his investment. This is the real story! —John

From the editor: Thanks so much for this, John. Since we wrote the article, the whole kit and kaboodle was auctioned off. I happened to wander by the factory one day and met the former manager and a long haired older guy who insisted that Zapata was a good guy and that it was the court system that did in the company.

They had bought the insides of the factory, he said he had a frozen food business. I then spoke with the landlord, Greg O'Connell, Jr., who told something different about Zapata and that he couldn't wait until all the equipment was gone and he could rent his space out for the betterment of the neighborhood. He also clued me in to the fact that the original owners, the original founders that also declared bankruptcy, had actually bought the leases of three of the stores, sold separately in the bankruptcy auction. One of the three was their original location on Vanderbilt Avenue.

In the meantime, they opened up an ice cream/donut shop, also in Prospect Heights about a year ago, called The Social.