Modern Times Beer’s bank has “commenced litigation” that is expected to “result in a court-ordered receivership sale” of the San Diego-headquartered craft brewery, according to a blog post on Modern Times’ website.
As part of the receivership process, Modern Times’ bank will nominate a receiver, who must be appointed by the court, to oversee the sale of the business and oversee the business’ financial decisions for the “immediate future.”
“While this isn’t a comfortable position for any company to be in, a receivership should hopefully allow Modern Times to be sold as a ‘going concern,’ as opposed to ‘turning off the lights’ and liquidating the equipment and inventory,” the company wrote. “A going concern sale would raise the odds of the new buyer keeping our talented staff, amazing products, and renowned customer experience intact.
“Obviously, this is not an ideal situation, but across a field of exceedingly difficult choices, it’s the best one available and is far preferable to ceasing operations entirely. We expect this process to move swiftly.”
Modern Times did not return a request for comment as of press time.
In a U.S. Securities and Exchange Commission filing in 2019, Modern Times lists its institutional creditors as California Bank & Trust and Live Oak Bank. In an investor notice, it totals its indebtedness to California Bank & Trust at $12.9 million, spread over three loans issued on April 1, 2019. It borrowed $8 million from Live Oak Bank, also in three loans issued on April 1, 2019. Interest rates on the six loans range from 3.75% to 6.75%.
During the pandemic, Modern Times received a $500,000 economic injury disaster loan (EIDL) from the U.S. Small Business Administration, as well as two draws from the SBA’s Paycheck Protection Program (PPP). Its first PPP loan of $2,215,200 was issued on April 5, 2020, and forgiven as of June 11, 2021, according to ProPublica. Modern Times was approved for its second PPP loan on February 11, 2021, but that loan’s forgiveness status is unclear.
In February, Modern Times CEO Jennifer Briggs told Good Beer Hunting (GBH) that the company was seeking a buyer or investor, and that a value for the company would be determined in May or June. The company was previously valued at $264 million ($3,448 per barrel) in documents filed with the SEC as part of a crowdfunding campaign, but Briggs told GBH that valuation was “too high” and that the latest numbers will be “pretty low.”
The news came less than two weeks after Modern Times announced it would be closing four of its locations – Portland, Oregon and Oakland, Santa Barabara and Los Angeles, California – and laying off 73 of its 266 employees. In a blog post, the company said the “financial state of the company” was “unsustainable” and the combination of the COVID-19 pandemic, “global declines in the craft beer industry,” and “four straight years of rapid, costly expansion” forced it to contract.
Modern Times has an Employee Stock Ownership Plan (ESOP), which controls 30% of the company. Former CEO Jacob McKean – who stepped down in May 2021 – remains a majority owner.
McKean and Modern Times’ chief operating officer Chris Sarette stepped down after the brewery was named several times in stories of harassment and toxic workplace environments in the spring of 2021, shared on the Instagram accounts of Brienne Allan (@ratmagnet) and @EmboldenActAdvance.