The sale of Modern Times took another turn Thursday with the ultimate acquirer of the San Diego brewery still in question.
BX MT BAMF LLC, an affiliate of Anaheim, California-based Brewery X, which was awarded the ability to acquire Modern Times during a June 17 auction, has “elected not to complete the sale process,” according to a press release issued Thursday by Modern Times.
With Brewery X apparently out of the picture, Kihei, Hawaii-based Maui Brewing Company is next in line as the court-approved backup bidder, with a $15.3 million bid.
Although Maui has moved into the buyer’s seat, there remains a long way to go before the sale process closes. Maui chief operating officer Scott Metzger told Brewbound “there are a lot of legal complications as we figure out who the ultimate buyer of Modern Times will be.”
The sale is expected to close in October 2022, according to the release.
How We Got Here
The $20 million bid from Brewery X – via BX MT BAMF – to acquire Modern Times, with a 14-day closing window, was approved by the court during a June 24 hearing. The brewery backed out of the sale on July 1, according to Modern Times.
“This was an unexpected development in this process,” Modern Times CEO Jennifer Briggs said in a press release. “I am looking forward to working with [Maui Brewing] and finalizing the sale process and transitioning the business.
“The Modern Times Brewing team of employees and professional advisors engaged with BX MT BAMF, LLC representatives in a sprint-like fashion to meet the tight transition timeline for the closing date of July 8, 2022,” she continued. “This last-minute change is abrupt, yet it gives us the opportunity to be even more methodical. It allows [Maui Brewing] the time to finalize their acquisition process per their asset purchase agreement and how it will be additive to our craft brewing community.”
“Distressed sale processes often experience some turbulence, including on the buyer side,” Paul Buie, managing director of Onyx Asset Advisors, the company overseeing the sale of Modern Times, said in the release. “Thanks to the strong interest that developed in the Modern Times’ sale process, the Receiver was able to select and confirm [Maui Brewing] as the backup bidder at the June 17th auction.”
A Rollercoaster Sales Process
The sale process has taken several turns since Modern Times’ primary lender Zions Bancorporation (California Bank & Trust) initiated the court-approved sale process following the brewery defaulting on three loans totaling $12.9 million.
Last month, a wrench was thrown into the auction process when Modern Times’ court-appointed receiver, Thomas Hebrank, named Brewery X the winning bidder, even though MTD Asset Acquisition (MTD) made a higher offer at $20.1 million. MTD’s offer included a 120-day close period and the request for Hebrank to file for Chapter 11 bankruptcy following the closing.
Michael B. Lubic, MTD’s attorney, filed an objection to the selection of Brewery X’s bid and submitted a new offer of $21 million with a 30-day close period and no Chapter 11 option on the grounds that the auction rules specified that non-monetary aspects, such as time to close, were not going to be considered as part of the auction.
“The auction was not conducted in accordance with the auction rules and the procedure was not fair, not commercially reasonable, and not designed to maximize value for the creditors,” Lubic wrote in the objection.
According to MTD’s asset purchase agreement included in Hebrank’s declaration, MTD is a Delaware-based LLC that lists K. Bagby Taylor as its president. Kurt Bagby Taylor is the founder of Next Glass, the parent company of Untappd, BeerAdvocate and Hop Culture; he exited the company following its sale in March 2020.
His father, George Taylor, is the CEO of Wilmington, North Carolina-based TRU Colors Brewery. According to notes in the auction bid log, MTD was bidding on behalf of TRU Colors. However, Kurt Taylor told WilmingtonBiz TRU Colors was not connected to the auction.
“The plan was to work through some of the challenges that Modern Times had,” Kurt Taylor told the business publication. “I really like the brand that they had built and thought that there was a lot of potential there to revive it. The employees there I thought were excellent – really skilled and good at their craft. My hope was to stabilize the business in Southern California and then potentially look to expand beyond there.”
Kurt Taylor has not responded to Brewbound’s request for comment.