Saint Paul, Minnesota-based Fair State Brewing Cooperative has filed for Chapter 11 bankruptcy reorganization, co-founder and CEO Evan Sallee wrote on the company’s website on Thursday.
“This does not mean we are shutting down – we are just restructuring our debt and will emerge on the other side stronger for it,” Sallee wrote. “The simple fact is that the pandemic put Fair State in a hole that we need help to dig out of, and we have a solid plan to get through this together so we can continue making the great beer you know and love.
“We’re extremely lucky to be part of this community, and being part of a community means asking for support when you need it.”
Sallee encouraged Fair State customers to support the business by visiting its taproom, purchasing Fair State and Chill State products or gift cards, and spreading the word about the businesses and sharing memories.
Fair State’s filing estimated that the company owes more than $5.16 million to up to 199 creditors, with secured creditors owed nearly $2.5 million. The filing included priority unsecured claims of $137,000 and nonpriority unsecured claims of more than $2.566 million.
The company estimated its assets included around $6.1 million in personal property.
Sallee is listed as a priority unsecured creditor for $130,000 in “wages, salaries, commissions.” Other liabilities include taxes to the Alcohol and Tobacco Tax and Trade Bureau (“unknown” amount), Metropolitan Council Environmental Services (unknown), and the Minnesota Department of Revenue ($7,000).
Among Fair State’s largest unsecured creditors are:
- Distributor Bernick’s ($429,868.33);
- Cannabev company CLRTY ($180,277.22), which the company said was due to “damages due to defective cans-in litigation”;
- Financial services company IOU Central ($174,396.25);
- KLC Financial ($150,000);
- Co-packer Wildpack Beverage ($116,038.02);
- Aluminum can supply company Lagersmith ($115,420.05);
- Hops provider Yakima Chief/Hopunion ($80,949.60);
- Mobile canner Iron Heart Canning Co. ($70,553.73);
- CI Minn ($70,000) for rent;
- Mitsubishi HC Capital ($67,605.51);
- Financial institution Headway Capital ($66,617.71);
- Custom label maker Brook and Whittle ($63,928.54);
- Atlas Staffing ($63,400.68);
- Chase ($58,189.10) for credit card debt;
- Packaging company Zuckerman-Honickman ($56,474.42);
- Supply company BSG ($56,018.52);
- Hemp-derived cannabinoid emulsions company Perfectly Dosed ($49,463.31);
- Staffing firm Salo LLC ($45,690);
- Capital One ($41,060);
- And keg company MicroStar ($40,046.42).
Secured claims include FC Capital Holdings for hemp-related intellectual property ($95,062.20); as well as several equipment leases with KLF Financial ($246,211.09; $111,181.05; $10,808.99; $70,062.91; $119,812.27).
Live Oak Bank also holds a secured claim for “all assets” for more than $1.83 million. Others include Pinnacle Capital for an equipment lease for $6,576.68; Specialty Capital for “all assets” for $258,193.40; the U.S. Small Business Administration for “all assets” for $165,838.52; Fox Funding for all assets for an “alleged merchant cash advance agreement” of $188,416.57; and Wells Fargo Bank for $3,099.08 for a forklift and related costs.
A meeting of creditors is slated for March 14. A status conference is also set for April 10. A proof of claim deadline has been set for June 12 for all creditors and August 12 for governmental units.
In September 2020, Fair State’s employees began a union effort, which the company voluntarily recognized. The company began releasing THC-infused sparkling seltzer water under the Chill State Collective banner in October 2022. Chill State also produces THC-infused offerings for other brands.