At least three breweries — Santa Maria Brewing Company, the Figueroa Mountain Brewing Company, and the Good River Beer Company — filed for bankruptcy in December, listing dozens of construction businesses in their lists of creditors.
Santa Maria Brewing Company Files for Chapter 11
Santa Maria Brewing Company filed for chapter 11 bankruptcy on December 15th, 2020 with several contractors as creditors.
According to the case file, the Santa Maria Brewing Company claims:
- Between 100 and 199 creditors
- Between $1M and $10M in assets
- Between $10M and $50 in liabilities
As of right now, Santa Maria’s bankruptcy filing is deficient according to the court. When a company doesn’t supply all the required information, the clerk of court issues a notice of deficiency. The party declaring bankruptcy then has 15 days from the date the notice is filed to supply the missing information. Otherwise, the case could be dismissed.
The following creditors within Santa Maria’s bankruptcy filing are contractors. The amounts owed to each were abs from the filing:
- Apex Fire Control Services Inc.
- Gabriel Architects
- Mid-Coast Fire Protection Inc.
- S Carlson’s Plumbing, Inc.
- San Luis Glass & Window
- Stanley Convergent Alarm
- Valley Pump & Jetting Inc.
Since Santa Maria’s bankruptcy filing is incomplete, the exact number of their assets, including property, accounts receivable, and revenue, is unknown.
What is Chapter 11 bankruptcy?
Chapter 11 bankruptcy is designed to allow the debtor to stay in business while they restructure their finances. Chapter 11 bankruptcy requires the debtor to submit a detailed plan for repayment to the bankruptcy court. This plan must be approved by the court as well as the debtor’s creditors.
This option is favorable for the debtor because it allows the company to continue operations while paying their debts over time.
If the debtor is unable to craft a viable plan for repayment, their Chapter 11 bankruptcy may revert to Chapter 7 bankruptcy, in which the debtor’s assets are liquidated in order to satisfy the debts.
Second wave of shutdowns cause Santa Maria to go under
The Santa Maria Brewing Company was bought by Byron Moles, his wife Karen, and brewer Dan Hilker in 2013. After great success at their Santa Maria location, the team looked to expand their operations northward.
For the well-reviewed brewery, that expansion meant opening a location in Atascadero. Moles and his partners purchased a former Harley-Davidson dealership in 2016 and got to work. However, the move proved itself to be a larger task than Santa Maria could have predicted.
Moles, citing financial issues associated with the move, reflected on the four years it took to gather the resources to open the location.
“I spread myself too thin,” Moles told the Atascadero News. “Fortunately, I’ve got some fantastic partners that have helped us get through the whole thing, but because this was such a big one, it was hard to funnel enough money through here to get it done any sooner than what we did.”
After four years, the Atascadero location finally opened in August of 2020. It’s the third location for Santa Maria, already having locations in San Luis Obispo and Nipomo.
Despite the financial challenges leading up to the ribbon cutting, Santa Maria was able to open their doors in the midst of the coronavirus pandemic.
Santa Maria Brewing Company took a substantial hit during the first wave of shutdowns, opting to stay open despite the recent second wave of shutdowns to avoid closing their doors permanently.
“Our backs are against the wall, and we really don’t have any other way to withstand it,” Moles said to KCBX FM in San Luis Obispo.
“We don’t have the heart either to lay off our employees when unemployment is up for most of them, and they don’t have an opportunity to collect it again, [and] I can’t see laying off people at Christmas time, it just doesn’t feel right,” Moles said. “It’s either open and live with the consequences or close and never open again.”
Figueroa Mountain Brewing Continues Chapter 11 Bankruptcy Battle
Figueroa Mountain Brewing Company, another California brewery, has also filed for chapter 11 bankruptcy in the wake of COVID-19.
The bankruptcy filing was submitted on October 5th, 2020, and the company has been going through the bankruptcy process ever since.
According to the bankruptcy documents, Figueroa Mountain claims the following:
- 200-999 creditors
- $9,139,400 in assets
- $18,625,530 in liabilities
- $55,460 in net income
Figueroa Mountain Brewing lists dozens of creditors who are contractors, including:
- 805 Signs
- A Plus Constructors, Inc.
- A Plus Signs
- Acme Construction Supply
- Advance Cable Systems
- Advanced Design in Asphalt by Hayes & Sons
- Ahern Rentals
- Allstar Heating & Air Conditioning
- Ames Roofing
- Anderson brothers Design & Supply
- Anderson Brothers Distribution and Supply
- Applied Industrial Technologies
- Ball Rig Welding
- Bates Concrete Construction
- BC Industrial Services
- BC Pump Sales & Service, Inc.
- Big I’s Sheet Metal and Welding
- Big Red Crane Company
- Blaze Builders
- Boelter
- Bottenfield Construction
- Brewers Supply Group
- Central Coast Heating & Air
- Central States Equipment & Service
- Condog Custom Metalworks
- Dahl Air Conditioning
- DPM Plumbing
- Five Star Chemicals and Supply
- Frontline Construction and Fencing
- GRW Equipment
- Harc Rentals
- Ironbite Fabrications
- J&S Plumbing
- Jake’s Plumbing
- Joo’R’s Welding & Metal Service
- Joseph Construction and Consulting
- Kay Industrial
- KTI Industrial
- Leonard Custom Works
- McCall Construction
- National Building Automation, Inc.
- Nielsen’s Building
- Ranch Hands Construction
- Royal Industrial Services
- Select Equipment Sunbelt Rentals
- Todd Pipe and Supply
- Tomasini Construction
- Valley Tool & Truck Rental
The brewery originally filed for bankruptcy as part of a plant to restructure the company’s finances and position itself for growth, a plan backed by Creekstone LLC, an investment firm in New York.
Due to the coronavirus pandemic, the company shifted to a heavy focus on packaged beer because fewer customers were going to bars. By the time coronavirus lockdowns were in full swing, the demand for packaged beer was 80 percent, and Figueroa Mountain struggled to keep up.
In August of 2020, White Winston, a lender based in Boston, filed a lawsuit against Figueroa Mountain to claim approximately $9.7 million in principal and interest. This, in part, prompted the brewer to file for bankruptcy. That’s when they saw the need to restructure their finances to meet rising demand for packaged beer and to pay the debts owed to White Winston.
As owner Jaime Dietenhofer put it to the Santa Barbara independent, “The vehicle to get there is reorganization.”
However, months into their restructuring under chapter 11 bankruptcy, Figueroa hit unexpected challenges.
The second wave of shutdowns in California as well as pressure from White Winston, their largest creditor, has caused the brewery to reconfigure their approach to restructuring under chapter 11 bankruptcy.
“Both revenue and expenses are substantially impacted by the shut-down,” James Long, the brewery’s chief restructuring officer, told the Pacific Coast Business Times. “The Stay at Home Order will have a drastic impact on the Debtor’s operations and required a complete re-working of the cash collateral budget that I was in the midst of preparing.”
White Winston objected to Figueroa Mountain’s $1.4 million financing plan and requested they come up with something else.
“Most of the steps that we’ve taken, we’ve been able to work something out with White Winston,” Christopher Prince, Figueroa’s bankruptcy lawyer, told the Pacific Coast Business Times. “How I would characterize it is that it’s been kind of cooperative on an interim basis. Not all issues are resolved, but we have been able to come to an agreement on some. The challenges have less to do with the bankruptcy case and more with the outside world.”
Along with their debts, Figueroa Mountain also owes approximately $1.6 million in taxes to various federal, state, and local agencies.
Good River Beer Company Files for Chapter 7 Bankruptcy in Colorado
The Good River Beer Company, based in Denver, CO, has also filed for bankruptcy during the coronavirus pandemic. Good River submitted their chapter 7 filing on December 15, 2020, citing fraud and embezzlement allegations against a former employee in the bankruptcy documents.
Good River Beer reported the following amounts at the time of filing for bankruptcy:
- $86,664.20 in total assets
- $335,596.81 in total liabilities
- $6,560.40 in A/R
- $80,103.80 in inventory
Good River also reports a total revenue of $652,372.47 between the first of January and the filing date of December 15, which is around 40% lower than their revenue of $1.1 million in 2018.
Allegations of fraud and embezzlement
Although Good River Beer doesn’t list any contractors as creditors in their bankruptcy filing, documents allege one of their former employees committed fraud and embezzlement that contributed to their financial woes.
The bankruptcy documents indicate $116,299.31 in fraudulent American Express charges and $30,403.57 in “fraudulent checks written to a fraudulent company.”
The employee accused of fraud was dismissed on September 24, just two months before Good River filed for bankruptcy. The case is under investigation by the Jefferson County sheriff’s office.