Foxtrot employees arrived at work on April 23 to find out they’d be laid off en masse. They were ordered to lock up the stores and kick customers out. At many of the delivery app–turned—grocery store chain’s 33 locations, they left behind shelves and freezer cases full of food. And in at least one location, they didn’t even clear out the milk and meat from the fridge.

Less than a month later on May 10, the rotting food along with most of whatever else was left of Foxtrot was auctioned off at a foreclosure sale held by JPMorgan over Microsoft Teams. Many of the call’s roughly 150 attendees, on the surface, seemed qualified to bid if the price was right. As I scrolled through the attendee list, I saw a woman who identified herself as the general counsel of a Chicago-based restaurant chain, management from two different Texas-based grocers, and staff of multiple private venture funds.

But these would-be bidders barely stood a chance before things got … weird. Eric Goldberg, attorney for DLA Piper, representing JPMorgan, explained that a company called Further Point Enterprises submitted a $2.2 million bid for Foxtrot’s assets in advance. Five different people in the chat asked for a list of the items within each lot. Goldberg then asked if there was a bid for $2.3 million. When nobody responded, he declared the sale of Foxtrot final, and opened the bidding for Dom’s, a specialty grocer in Chicago that Foxtrot merged with in November, at $200,000. Someone unmuted to say, “People are asking for the links to the lots”; Goldberg didn’t acknowledge this and concluded the call without any bids on Dom’s.

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Further Point Enterprises, a private holding company reported by the Real Deal to be working with Mike LaVitola, one of Foxtrot’s co-founders, successfully acquired “substantially all of the assets” of Foxtrot—including the inventory in the stores, the intellectual property, the furniture, and more—for a tiny fraction of the $180 million investors gave Foxtrot over the past decade.

What happens next?

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That’s the question on Lindsey Ridley’s mind. She was a shift manager at the Wicker Park location in Chicago, putting her years of work experience at companies like Starbucks and Walgreens to good use.

“Nobody should have to experience this void of unknowns,” she said. When is she getting another job? Now that she’s behind on rent, when is her landlord going to serve her with a five-day notice to evict? Where will she and her daughter go? Ridley set up a GoFundMe but has only raised $180. She said she’s been getting some interviews, but nothing has panned out. When managers realize she used to work at Foxtrot, the interviews “divert from what my qualifications are, and how hard I’ve worked, to ‘What happened?’ and ‘Wow, did you see it coming?’ ”

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Foxtrot’s origin story began on a ski trip when Mike LaVitola and Brian Jaffee decided it was too hard to get beer, wine, or ice cream delivered to their apartments. It was 2012, about a year after the initial launch of Postmates and the same year Instacart and Drizly launched. The two University of Chicago B-school students looped in a software developer to help, and the trio convinced their friends and family to give them $50,000, launching Foxtrot first as a delivery app in Chicago in 2013.

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Things got off to a good start. Foxtrot opened up its first location, and then another, and then two more. LaVitola started to raise money from outside his social circle to grow the company—$1 million in 2015, $6 million in 2018, $17 million in 2020, $42 million in 2021, and in 2022, a whopping $100 million. That money transformed Foxtrot from a local chain of corner stores to a VC-backed upstart where the young and affluent could buy Jeni’s ice cream, craft beer, and high-protein pumpkin-seed ramen, or have a barista whip them up a coffee date smoothie. Foxtrot moved to a 25,000 square feet headquarters that one former employee described to me as “the world’s stupidest office,” befitting Facebook or Google, not a few dozen corner stores that hadn’t turned a profit.

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Foxtrot’s sudden collapse means they owe a bunch of people a bunch of money. A number of vendors have come forward to the press saying they have unpaid invoices. Many, like Carolyn’s Krisps, Onigiri Kororin, and Oak Cliff Coffee, are small businesses. Two vendors, both produce companies, have sued. Landlords have sued. And workers are suing—under the WARN Act, companies with more than 100 full-time employees are required to give 60 days’ notice of layoffs, or compensate workers for two months’ worth of wages and benefits.

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But although all these groups—the workers, the landlords, and the suppliers—have debts that are (likely) legitimate, most of those folks will never see a penny.

On Wednesday, Foxtrot’s parent company, Outfox Hospitality, filed for Chapter 7 bankruptcy, but it’s not clear what’s left to divvy up. After all, JPMorgan has ostensibly already sold what they asserted was “substantially” everything to Further Point. We’re now left with two different companies: old Foxtrot, which still owes all the former employees and vendors money (and has entered bankruptcy), and new Foxtrot, which owns all of old Foxtrot’s assets and is reportedly talking to old Foxtrot’s former landlords in an attempt to reopen stores.

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Along with Foxtrot’s assets, Further Point Enterprises acquired the right to relaunch Foxtrot without cleaning up the company’s metaphorical, and in some cases literal, messes. As Melissa Jacoby, professor of law at University of North Carolina at Chapel Hill, explained to me, although there can be exceptions, buyers in these types of sales don’t inherit any of the debts or obligations of the original company. It looks like this is a fresh start for the company’s founder.

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One auction attendee told Retail Dive that the process was “completely ramrodded.” What’s grim, however, is that secured creditors like JPMorgan are usually free to ramrod as they please. If JPMorgan sold Foxtrot for less than the fair market value, JPMorgan would likely lose its right to sue Foxtrot to recover any additional money. But, generally speaking, secured creditors like JPMorgan don’t have any obligations to all the unsecured creditors who are behind them in line—in this case, the many men and women who were stocking Foxtrot’s shelves, or the small businesses that have been hosed.

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Eric Goldberg, Further Point Enterprises, Mike LaVitola, and Greenberg Traurig, the firm representing Outfox Hospitality in its bankruptcy, did not return Slate’s requests for comment.

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The laws that put secured creditors like JPMorgan at the front of the line are important. A company could owe you money because it failed to pay out required severance, because it’s polluting your drinking water, because it sold you a defective product, or simply because your grandma bought you a gift card you haven’t redeemed yet. And an increasing number of people are independent contractors—Uber drivers, freelance journalists, and more—putting them in roughly the same legal category (suppliers) as the seltzer and ice cream companies that sold goods to Foxtrot.

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But across the board, our legal system—the Uniform Commercial Code, which governed Foxtrot’s foreclosure, the bankruptcy, and what comes next—doesn’t look kindly on the claims of the little guy.

As her store was closing, Ridley asked her boss if she could take home some food, at least the perishable stuff, and her boss told her no—that food belonged to the bank now. Which was true. But also—disgusting.

If this all sounds both profoundly unfair and also a little nonsensical to you, you’re not alone. In a 1981 article in the Georgia Law Review, the man who originally wrote this part of the law, Grant Gilmore, fessed up that it had probably been a mistake: “Why on earth should the fruits of a known insolvent’s labors feed the assignee while all the other creditors starve?”

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So, what does happen next?

Groups like United for Respect, an organization of retail workers across the country, and Americans for Financial Reform, a bank watchdog, are supporting a bill called the Stop Wall Street Looting Act, which would give workers seeking severance greater priority in the bankruptcy code and make investors who own at least 20 percent of the company responsible for workers’ unpaid wages.

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By many accounts, Foxtrot could have succeeded. Although some stores were floundering, many of its locations were consistently busy (and, according to former employees, profitable).

Investors handed one young guy with an MBA $100 million to launch a bunch of convenience stores. Meanwhile, the amount of bank credit available for small businesses has been shrinking after adjusting for inflation. The issue isn’t that VC-backed companies are encouraged to take big risks and swing for the fences; it’s that they’re encouraged to pour in money, create a bunch of problems, and then speed off in their Teslas.