District 9 Brewing (D9) – sibling company of the troubled sales, distribution and e-commerce platform Bevana Partners – has filed for Chapter 11 bankruptcy protection.
The filing was made in U.S. Bankruptcy Court for the Western District of North Carolina on Friday. Both D9 and Bevana are under the same umbrella company, Community Brewing Ventures (CBV).
The Cornelius, North Carolina-based company reported it has between 50 and 99 creditors, $100,001 and $500,000 in assets, and between $1,000,001 and $10 million in liabilities, according to a court filing.
D9 founder and CEO Andrew Durstewitz told Brewbound the filing is a way to address the brewery’s “historical debts.”
“It’s pretty much the same story as with most breweries right now, hit hard [due] to COVID and never fully recovered and now we need to restructure,” he said. “To clarify, there is no intent of closing D9 Brewing.”
Among the company’s creditors are several current and former Bevana partner breweries, including Champion Brewing (now closed), Big Boss Brewing, New Sarum Brewing, Orpheus Brewing, Pontoon Brewing, UpDog Kombucha.
Last year, Pontoon filed for Chapter 11 bankruptcy protection. In court filings, the brewery claimed Bevana neglected to uphold its end of their agreement “by failing to pay for product, causing delays, and ultimately refusing to order product while simultaneously cutting off [Pontoon’s] ability to distribute product,” G. Frank Nason, an attorney for Pontoon, wrote in the brewery’s reorganization plan.
“The result was a loss of approximately 65% of revenues. [Pontoon] is owed approximately $289,239 from CBV for product, and has claims against CBV for losses in excess of $1.5 million,” he continued.
The judge in Pontoon’s bankruptcy proceedings granted the rejection of the brewery’s brewing and service agreements with Bevana.
Also listed among D9’s creditors is SouthStateBank, which filed a lawsuit against the company last fall. SouthState claimed D9 had defaulted on a loan and breached its contract when it sold brewing equipment at auction, but did not remit those funds to the bank.
D9’s petition excluded several key items, drawing a notice of deficiency from the court. Those items include lists of property, secured claims, executory contracts, co-debtors and the 20 largest unsecured creditors.
The company has filed motions to maintain its bank accounts and cash flow management, keep making payroll for its eight employees and continue making payments to its utility companies.
Bevana, a sister company to D9, has come under scrutiny in recent months as partner breweries have expressed doubts about the platform’s viability.
A handful of Bevana’s partners have permanently closed. Chicago-based Urban Brew Labs, cited in a March 2022 press release touting Bevana’s rebrand, shuttered in September 2022. Charlottesville, Virginia-based Champion Brewing partnered with Bevana in December 2022 and closed in June 2023 amid lawsuits unrelated to its relationship with the platform.
Court filings paint the picture of a licensing and contract brewing business whose business relationships have deteriorated past the point of salvage.
“While the debtor is known for providing first rate craft beer as one of Mecklenburg County’s best craft brewers, the debtor holds rights to certain rights as a licensee of intellectual property such as brands and recipes of other well-known breweries,” D9 wrote in a motion to obtain post-petition financing. “Due to certain disputes with regards to the licensors of these intellectual property as well as the production house charged with producing this beer, certain inventory and receivables have been held hostage resulting in a rapid decline of the debtor’s receivables. Consequently, the debtor needs at least $150,000 in additional working capital to get the debtor’s post-petition operations and to otherwise pay costs associated with this case.”
D9 is seeking to borrow that $150,000 from Margaret Van de Ree, Durstewitz’s mother-in-law. Van de Ree’s conditions include being deemed “super-priority” for repayment, a “junior lien on all assets,” “acceleration/maturity” of the debt if the case is dismissed or converted, and deadlines of December 31 for plan confirmation and April 30 for approval of the motion to lend D9 the money.
“The debtor has conducted an exhaustive investigation into potential sources for such working capital,” the motion continued. “While the debtor does not believe that these funds could be available from any other source on less oppressive terms, the debtor is certain that no lender would give the debtor this money on an unsecured basis in exchange for a mere administrative expense claim against the debtor’s estate.”
A hearing to discuss D9’s motions to borrow money from Van de Ree, continue using cash to make payroll and utility payments and other motions is scheduled for April 4.