A California superior court judge signed an order Monday approving bidding procedures and setting forth the schedule for the auction of San Diego craft brewery Modern Times, according to Orange County Superior Court of California court records.
Judge John C. Gastelum signed off on an amended order setting forth the auction, via Zoom or a similar platform, on June 17 at 9 a.m. PT. The court will hold an auction confirmation sale hearing on June 20 at 10 a.m. PT.
Zions Bancorporation (California Bank & Trust), Maui Brewing parent company Aumakua Holdings, receiver Thomas C. Hebrank of E3 Advisors and third-party Live Oak Bank filed an amended joint ex parte application agreeing to bidding procedures and setting a date of the auction and sale hearing last week.
Live Oak had previously objected to a previous ex parte application that would have relieved debts owed to the bank by Modern Times and contested the sale of assets at the brewery’s flagship Anaheim location as part of the proposed sale of the company. Those issues appear to have now been resolved.
The judge’s order Monday approved of the stipulations for the bidding process, with Maui serving as the stalking horse bidder at $7.62 million. Many of the previous stipulations remain, just with Live Oak added to the process.
According to the latest filing, the receiver, in consultation with Modern Times, Zions, and Live Oak, will determine the highest bidder and a backup bidder. Among the terms set forth were:
- Bids are due in writing by 5 p.m. PT on Monday, June 13;
- The purchase price must exceed Maui’s $7.62 million stalking horse bid, plus $250,000 to cover a maximum breakup fee, plus another $250,000 for the minimum overbid;
- Bidders must provide a signed asset purchase agreement;
- And make a $500,000 good faith deposit by wire transfer to the receiver, and provide proof of available funds sufficient in the receiver’s discretion to close.
The sale of the assets “shall be free and clear of all indebtedness,” liens, “claims against seller or property of seller, and encumbrances,” other than the assumed liabilities, according to the court filing.
In late March, Modern Times’ main secured lender Zions (California Bank & Trust) alleged that the brewery defaulted on three notes as well as breached a credit card agreement, among other claims, and “commenced litigation” to begin the process of a receivership sale of the brewery. Those notes included a $1.4 million revolving loan note, a $7.6 million term loan, a $2.5 million term loan, all with remaining principal balances.
The complaint alleged that Modern Times had failed to pay the amounts it owes Zions, including as of March 21, 2022:
- $900,000 on its revolving loan note, plus $2,125.01 in interest, $77 in fees and at least $75,000 in attorneys’ fees;
- $4.845 million on its term loan note, plus $97,580.71 in interest, $85 in fees, $5,579.37 in late fees, and at least $75,000 in attorneys’ fees;
- $1,291,666.86 on its other term loan note, plus $28,696.19 in interest, $85 in fees, $2,304.44 in late fees, and attorneys’ fees of at least $75,000;
- $769,134.78 in a breached credit card agreement, plus $15,383 in late charges, plus finance charges, and attorneys’ fees of at least $75,000.
The complaint also alleged that Modern Times defaulted on its obligations to Live Oak, its subordinated debt holder.
Modern Times CEO Jennifer Briggs previously said she expected the future of the brewery to be known by the end of June.