The founders of the Craft Beer Cellar retail franchise and its flagship retail store and restaurant have filed for Chapter 7 bankruptcy liquidation for both business entities (Craft Beer Cellar Group and Craft Beer Initiative LLC), according to filings in the U.S. Bankruptcy Court for the District of Massachusetts.
The filings follow the closure of both businesses at the end of 2023 after founders Kate Baker and Suzanne Schalow were unable to sell the operation. Baker and Schalow cited a need for a better work-life balance at the time for the proposed sale and eventual closure.
The bankruptcy filings paint a picture of a business struggling with mounting debts and a landlord dispute over back rent that led to legal action.
Craft Beer Initiative (also known as Craft Beer Cellar and the Trinktisch beer hall and restaurant) listed liabilities in excess of $1.033 million to up to 99 creditors, including more than $541,778 to secured creditors, $1,195 in priority unsecured claims, and more than $490,619 in non-priority unsecured claims.
Meanwhile, Craft Beer Cellar Group listed liabilities totaling $493,571.20 to up to 49 creditors, including more than $213,016 to secured creditors, $95,000 to the Internal Revenue Service (IRS) as a priority unsecured creditor, and more than $185,554 to non-priority unsecured creditors.
Per both filings, the company estimated that no money would be available for unsecured creditors once administrative expenses are paid.
Craft Beer Initiative listed $52,230 in assets, while Craft Beer Cellar Group claimed assets of $500. The value of the Craft Beer Cellar brand and intellectual property was listed as “unknown.”
Among the secured claims for Craft Beer Initiative are a $47,500 tax levy to the Commonwealth of Massachusetts and $494,278 to the U.S. Small Business Administration.
Among the non-priority unsecured creditors listed are the operation’s landlord, several beer distributors, craft breweries, food suppliers, utility companies, and payroll operators, among others.
Craft Beer Cellar’s secured creditors include a $50,405.34 tax levy to the Commonwealth of Massachusetts and a $162,611.37 lien with the U.S. Small Business Administration on the trademark for the Craft Beer Cellar brand.
Court records show that Craft Beer Initiative’s gross revenue was $2,684,609 for calendar year 2023 and $2,702,160 for 2022. Craft Beer Cellar Group recorded gross revenue of $145,635.89 for calendar year 2023, and $173,024.11 for 2022.
The bankruptcy filings for both operations list pending legal actions. One involves the retail store and restaurant’s landlord, Albert J. Locatelli Realty Trust, which is listed as a non-priority creditor owed $181,565.08 in back rent.
The dispute between Craft Beer Cellar’s founders and their landlord played out in late 2023, with the landlord threatening to evict the business on November 1, according to the Belmont Voice. The parties appeared to reach an agreement to allow the business to operate through the end of the year while paying $3,400 a week, but the deal fell apart due to an IRS levy on Baker and Schalow’s accounts, the outlet reported. Eventually, Cambridge District Court ordered Craft Beer Cellar to pay back rent.
Another pending case against Craft Beer Cellar Group was brought by the company’s former chief operating officer, Tatum Stewart, who claims she is owed back pay, accrued vacation time and legal fees. One of the bankruptcy filings lists Stewart as a non-priority unsecured creditor owed $58,000.
A February 6 court order moved the Craft Beer Initiative bankruptcy filing to the same judge, Christopher J. Panos. The next step for the bankruptcy is a meeting of creditors scheduled for March 5. Creditors have until April 15 to file a proof of claim.