Michigan’s Griffin Claw Brewing filed for Chapter 11 bankruptcy last week, though not for the reasons frequently cited by other breweries recently.
The brewery is profitable but made the filing to help with an ownership restructuring and to protect employee jobs and salaries as there have been ownership disputes since the death of co-founder Ray Nicholson in 2019, the Detroit News reported.
Griffin Claw filed Friday under the name “Eton Street Brewery, LLC,” in the Eastern District of Michigan U.S. Bankruptcy Court. Court filings show the company is indeed profitable and was growing as of March 2024, with total assets of $4.298 million (+4% versus March 2023) and revenue of $2.151 million (+6%).
The main dispute among ownership centers on “what is owed” to Nicholson’s heirs versus Griffin Claw co-founder Norman LePage’s family, stemming from the 2019 sale of Clubhouse BFD in Rochester to Griffin Claw, according to Detroit News.
Nicholson and LePage founded Eton Street LLC (ESB) in 2011, and created Griffin Claw Brewery under the ESB name. The company’s initial ownership was divided evenly between Lepage, Nicholson and their families, including the Bonnie J. LePage Trust, the Mary E. Nicholson Trust and the Michael A. Nicolson Revocable Living Trust, according to a declaration filed by Griffin Claw managing partner Scott LePage.
In January 2017, ESB entered an amended promissory note, the “Mary Nicholson Trust Note,” in favor of the Mary Trust for $3,898,186.54, with the option to extend payment on the note at any time.
In August 2019, ESB acquired Clubhouse, a Rochester restaurant, from ESM Properties. with a total purchase price of $2.53 million, transforming the location into Griffin Claw’s second taproom and brewery location. However, “no money was paid to ESM at closing,” and instead $1,717,807 “was to be paid to ESM in the future pursuant to a promissory note,” while the remaining value was paid to the Small Business Administration and Huntington National Bank “to pay off existing loans on the property,” according to Scott LePage.
Around the same time, ESB also acquired the assets of the operation company for Clubhouse, Restaurant Management II (RM II), with a purchase price of $3.1 million. A binding letter of intent was issued on August 8 laying out plans to pay RMI II over time. However, “no payments have been made for RM II’s assets, though which ESB [Griffin Claw] has operated the Griffin Claw Clubhouse since that time,” LePage wrote.
Nicholson had agreed to pay RM II through the brewery’s operations. However, “neither the purchase agreement nor the binding letter of intent were fully executed, and the priority of repayment of the various obligations was never documented, because sadly, Ray Nicholson died on Saturday, November 30, 2019, at the age of 85,” LePage wrote.
In January 2023, the Mary Trust and Michael Trust filed a lawsuit against ESB and LePage “seeking immediate repayment of the Mary Nicholson Trust Note and the appointment of a receiver.” The involved parties went through several rounds of unsuccessful mediation.
As a result, ESB has entered Chapter 11 bankruptcy to protect the company’s operations “with the goal of pursuing a going concern sale of its assets to maximize the value of its assets for the benefit of creditors.”
On June 25, ESB signed a non-disclosure agreement with ESB Acquisition, a “newly formed entity formed for the purpose of acquiring substantially all of the assets of the debtor and is wholly owned by one or more members of the LePage family,” according to court documents. ESB Acquisition submitted an offer to purchase ESB’s assets on July 17.
A bidding procedures hearing is scheduled for August 13, with a bid deadline of October 3. If necessary, ESB’s assets will go to auction on October 7, with a sale hearing on October 10.
ESB has obtained financial advising company Morris Anderson & Associates to assist the company in the bankruptcy and sale process.
Griffin Claw did not publish 2023 production numbers in the Brewers Association’s (BA) May/June issue of New Brewer Magazine. However, the BA included the brewery in its list of microbreweries that produced between 6,000 and 15,000 barrels annually.