Fresh out of a bitter bankruptcy, LaMar's Donuts is bouncing back with espressos, lattes and a new branding strategy with Denver's Dazbog Coffee Co.

"Coffee is now as important as doughnuts," says fast-food veteran Anthony Bonelli, LaMar's new chief executive.

LaMar's, a trimmed-down, 23- store doughnut chain based in Arapahoe County, announced Wednesday a co-branding program with Dazbog, the family-owned specialty coffee wholesaler.

In nine states from Arizona to Tennessee, LaMar's is retrofitting its service counters with coffee bars sporting the Dazbog name and look. Within the next 30 days, Dazbog's bold red-and-black logo will be prominently displayed at all LaMar's locations and embossed on the chain's porcelain cups and mugs, Bonelli said.

After two years in Nebraska's U.S. Bankruptcy Court and the shuttering of 19 stores in the past year, LaMar's former holding company, Franchise Consortium International, was forced last month to sell all its stock in LaMar's Donuts International. The buyers - Ed Hughes of Marshalltown, Iowa, and Jack Irwin of Lincoln, Neb. - paid $100,000 cash and agreed to retire roughly $1 million in debt and take on $500,000 in additional obligations.

Former owner Joseph Field, who moved the chain's headquarters from Kansas City, Mo., to Denver in 2002, has filed an appeal contesting the sale.

Bankruptcy trustee Thomas Stalnaker described the bankruptcy proceedings as "very contentious."

Bankruptcy Judge Timothy Mahoney rejected Field's competing $900,000 bid against Hughes and Irwin, both former investors and among LaMar's biggest creditors.

"In this case, there is no love lost between Mr. Field and the Hughes-Irwin group," the judge noted in February after siding with Hughes and Irwin.

"Mr. Hughes and Mr. Irwin got involved in this business . . . as investors, lenders and guarantors at the behest of Mr. Field. For a variety of reasons, they have had a falling-out, to say the least, and now are fighting over the control of the businesses because each see control . . . as the only method by which they can salvage their investments."

Bonelli, whose management background includes stints at McDonald's and Blimpie Subs & Salads, was hired to revamp LaMar's business plan following the closing of 19 stores in the past year.

"We're becoming a much more franchise-friendly company," he said.

Dazbog appears a good fit for LaMar's re-branding of its image and products, although financial details between the two companies were not provided.

Since 2000, Dazbog has supplied coffee to LaMar's under a private label arrangement. The new partnership will marquee the distinct brands of both companies - a strategy aimed at drawing attention to LaMar's expanded coffee line of steaming cappuccinos and mochas, specialty iced brews and seasonal fruit smoothies.

Currently, LaMar's traditional drip coffee accounts for just 7 percent of store sales.

"We think that is way too low," Bonelli said. "We think we can be in the high double digits - the 37 percent or higher."

LaMar's newly acquired caffeine buzz follows the strategy of chain rivals Dunkin' Donuts and Krispy Kreme. Analysts have credited the recent rise in same-store sales at both chains to their broadened coffee selections. At Dunkin' Donuts, coffee now accounts for 47 percent of store sales, Bonelli said.

Although it's hard for a blue-collar doughnut shop to beat a Starbucks on atmosphere, Bonelli says adding specialty coffees to LaMar's menu will allow the chain to better compete against other quick-service restaurants, including convenience stores.

Bonelli said LaMar's has franchise agreements for new stores in Colorado, Georgia, Tennessee, Kentucky and Arizona.

Company spokesman Ron King said seven of LaMar's top 10 stores are in the Denver area, averaging about $660,000 in annual sales.

Owners pay a one-time $28,500 franchise fee and are required to make royalty payments of 5 percent on sales, he said.

Bonelli said the total investment in a 2,400-square- foot store can range from $300,000 to $400,000.