The private investment group announced as a majority investor in Weyerbacher Brewing Company this past April has backed out of the deal, the brewery’s chief operating officer, Josh Lampe, told Brewbound.
Instead, the Easton, Pennsylvania-based craft brewery has turned to a group of seven individuals and two trusts to invest $50,000 in exchange for shares in the business, according to a reorganization plan filed in U.S. Bankruptcy Court in Pennsylvania’s Eastern District.
1518 Holdings abandoned plans to buy a majority stake in Weyerbacher, a 24-year-old craft brewery that sold as many as 19,543 barrels at its most recent peak in 2014, shortly after the company filed for Chapter 11 bankruptcy in April, Lampe said.
“We’ve been going at it on our own, and we’ve got a lot of beer coming out and are making headway with getting everything back in stock, which is a good thing,” he added.
The investor group includes company founders Dan and Sue Weirbach, as well as past and present employees. Two trusts — the TWF Trust and the Lampe Trust — will each hold 40% of the company, and the seven individual investors will share the remaining 20% of the business, according to the plan. Josh Lampe will remain at the helm of the company, while Dan Weirbach will retain his CEO and board chairman titles and serve in an advisory role.
Under the plan, Weyerbacher will use the cash infusion and operating revenue to pay back its lenders. The company’s largest debt owed is $2.2 million to BB&T Bank for a loan that covered major brewhouse expansions. The loan from BB&T and a $310,000 loan from Midtown Resources are both classified as secure claims and must be paid back in full. Lampe said that the Midtown Resources loan was a “stopgap” to secure funding to keep producing beer.
Weyerbacher also owes $1.9 million to other creditors, but those claims are unsecured and the company plans to pay back a total of $186,000 according to the reorganization plan.
Albert A. Ciardi III, the attorney representing Weyerbacher in its bankruptcy, said it’s common in Chapter 11 proceedings for some creditors not to be repaid in full.
Lampe said there have been no layoffs at Weyerbacher since the company laid off two salespeople in February. The company has no plans to close its retail locations in Easton, where it operates a 30,000-barrel production brewery and taproom, or in New Hope, where it opened a stand earlier this year inside a food hall and local market.
“We’re still working through our issues, but my main focus is the future of the company and making sure that we are able to keep putting out great beer,” Lampe said.
Weyerbacher’s proposed reorganization plan and disclosure statement were filed in court last month, and a confirmation hearing for the plan is scheduled for November 4. A committee of creditors has overseen the creation of the plan. They include Hauser Packaging, Country Malt Group, Northeast Barrel Company, and Yakima Chief Hop, according to court documents.
Legal teams for the committee and Weyerbacher have sparred over appropriate professional representation. Weyerbacher will pay legal fees for both parties, and the committee has appointed two legal teams and a financial advisor, which Weyerbacher formally opposed in court filings on July 2 and July 11, respectively.
According to the disclosure statement that accompanied the plan, Weyerbacher has budgeted $100,000 for all professional fees, to be split evenly between their own attorneys and the committee’s representatives. If fees exceed that budget, Weyerbacher will pay the difference from the $186,000 allotted for unsecured creditors, a group that includes those appointed to the committee.
Payments to professionals take precedence over those to creditors, Ciardi said.
“They have an economic incentive to keep a close watch on their professionals, just like the debtor has an economic incentive to keep a close watch on its professionals,” he added.
In a July 11 filing, Weyerbacher’s legal team objected to the appointment of the committee’s financial advisor, noting that the expected total for professional fees for all parties could reach $200,000.
Petitions filed to the Eastern District court in June and July paint a picture of a strained relationship between Weyerbacher and the committee. Weyerbacher’s July 2 objection notes that in a phone call with the committee’s lawyer, Schuyler Carroll of Loeb & Loeb, “Mr. Carroll advised that the committee’s marching orders to counsel had been simple: destroy the Debtor.”
A filing from the committee on July 24 dismissed that claim as “mudslinging,” adding that the “committee has taken its fiduciary duties seriously and has chosen professionals that can advise the committee on the best course of action for the Debtor’s estate, whether through reorganization, asset sale or liquidation.”
Carroll did not respond to messages seeking comment.