Financially troubled Austin craft beer maker Celis Brewery has staved off an impending closure, for now.
The company’s assets and property were set to be sold at auction on Tuesday, but a Chapter 11 bankruptcy filing submitted yesterday has protected Celis from losing its real estate and its brewing equipment.
In a notice issued Monday, Celis’ mortgage lender, Amplify Credit Union, said the brewery’s anticipated foreclosure sale would not occur after parent company FFBC Operations LLC, as well as its real estate affiliate FFBC Real Estate LLC, each declared Chapter 11 bankruptcy.
Last week, Christine Celis, who in July 2017 resurrected her father Pierre Celis’ namesake brewery after 25 years, told Forbes that she planned to head off the public auctions with a bankruptcy filing, adding that the company was “operating as normal.”
According to Monday’s filing in the U.S. Bankruptcy Court for the Western District of Texas, FFBC Operations’ total debt exceeds $10 million to hundreds of creditors. Additionally, the company said it plans to “pursue a sale of the assets as a going concern and/or the filing of a plan of reorganization that maximizes the value of their assets and business for the benefit of creditors and equity.”
As Brewbound reported last week, a public sale notice published in the June 21 edition of the Austin American Statesman announced that the building housing Celis Brewery was slated to be auctioned off today during a foreclosure sale at the Travis County Courthouse. A second auction for “all” of Celis’ equipment was scheduled for later today at an Austin law firm in order to “satisfy a lien held by Amplify Credit Union.” Last month, Amplify filed a lien against FFBC Real Estate for defaulting on a $5.3 million note taken out in March 2016.
In addition to Amplify Credit Union’s lien, FFBC Operations is facing a nearly $28,000 tax lien from the state of Texas, as well as hundreds of thousands of dollars in liens from three companies that performed electrical and construction work at the brewery.
Monday’s bankruptcy filings revealed a list of eight secured creditors, including Amplify Credit Union, Capital SBA Loan, investment firm Celis Phoenix LLC, forklift company Crown Equipment, Navitas Credit Corp., Austin craft brewery Pedernales Brewing Company, Wells Fargo Finance and packaging company Westrock CP LLC.
The list of unsecured creditors was much longer, including investment firm The Blue River Fox LLC ($500,000), event management and ticketing website Eventbrite ($500,000), advertising and branding agency Ampersand ($145,751), public relations firm Pen & Tell Us ($48,391), Great American Insurance Group ($27,747), and attorney Jame Houchins ($21,734).
The company also lists hundreds of thousands of dollars in unsecured debts to several brewery supplier companies, including: Berlin Packaging ($191,000), Microstar ($102,866), Country Malt ($80,542), BrauKon ($60,000), American Canning ($57,557), Crosby Hop Farm ($51,122), Brewers Supply Group ($48,651), Great Western Malting ($43,016), Pak Tech ($20,074), Ball Corporation ($19,000), the Krones Group’s Trans-market ($22,266), restaurant supply company Boelter Companies ($20,396), and Fruition Construction ($25,752).
Beyond FFBC’s largest creditors is a list of other companies and organizations owed money, including the national trade group Brewers Association, the Texas Craft Brewers Guild, Independence Brewing Company, the Master Brewers Association, White Labs, former Celis chief operating officer and president Bill Mulroy, and beer distributors Del Papa Distributing and L&F Distributors. The company’s service list also includes charity group Barks for Beers, subscription news service Beer Marketer’s Insights, music rights company BMI and trivia operator Geeks Who Drink.
FFBC also counts several governmental agencies on its service list, including the Internal Revenue Service, Texas Alcoholic Beverage Commission, the Alcohol and Tobacco Tax and Trade Bureau’s excise tax bureau, the U.S. Small Business Administration, and the Texas Workforce Commission, among others.
Meanwhile, FFBC Real Estate’s filing includes fewer than 50 creditors, however, its estimated liabilities range from $10 million to $50 million. The real estate arm’s unsecured creditors include HMI Construction ($271,872), shipping container company Falcon Structures ($16,007) and law firm Jackson Walker ($9,583), among others.
Also Monday, FFBC filed a motion to keep its utility companies from discontinuing services. According to court records, FFBC pays about $16,000 monthly in utility services and expects to spend as much as $10,000 for utilities over the next two weeks.
As Brewbound reported in May, rumors of financial struggles, layoffs and a potential bankruptcy filing have encircled the Celis operation since early 2019. At the time, a new investor group was considering acquiring the distressed brewery. Sources told Brewbound that Celis was in trouble soon after opening in 2017, after overspending on a 50,000-barrel brewery in northwest Austin and relying on financial models that required high double-digit, year-over-year growth in order to service debt.
UPDATE (5:48 p.m. EST): Celis Brewery issued a press release Tuesday evening addressing the Chapter 11 bankruptcy filing. In the release, Christine Celis admitted that the company “struggled to make financial ends meet under larger than expected debt service since day one.”
“Even though our beer has been one of the fastest growing craft beers in Texas, the financial model we started with put us in a cash crunch that simply did not give us any room to maneuver in a highly competitive market,” she said in the release. “We intend to fix all of that through the Chapter 11 process. It will allow us to continue to make my Dad’s legendary beers and grow within more realistic parameters.”
According to the press release, Celis, along with her daughter, Daytona Camps, will continue on “as employees of the brewery.” Celis will serve as the “face of the brand” and focus her efforts on sales and marketing, while Camps will develop new beers and products as the company’s brewer.
Celis called the reorganization “strictly a financial adjustment” being made so the company can “grow in a more stable and profitable manner.”
“Nothing about our beers, our ingredients, our recipes, our methods or our distributor network is changing,” she said in the release.