Pontoon Brewing has officially divorced from Bevana Partners as part of its reorganization under Chapter 11 bankruptcy protection.
Pontoon filed for bankruptcy in the U.S. Bankruptcy Court for the Northern District of Georgia in November, one month after it announced it had to close its doors. Last week, U.S. Bankruptcy Court Judge Lisa Ritchey Craig approved the rejection of the Sandy Springs, Georgia-based brewery’s brewing and service agreements with Bevana’s parent company Community Brewing Ventures (CBV).
With the rejection confirmed, Pontoon announced it plans to resume distribution to its wholesale partners without Bevana as an intermediary.
“In order for us to have this bankruptcy plan in place, I had to have those distributors that wanted us to come back,” Pontoon CEO Sean O’Keefe told Brewbound. “Every single distributor was like ‘yes.’ And I don’t know if every single distributor will, in fact, take us back. But the general consensus of the ones that we’re at least starting back up with was ‘thank goodness.’ And that was really disappointing and frustrating.”
Pontoon has had a tumultuous year. In mid-January, Pontoon reopened its Sandy Springs taproom – an about-face following the October 2023 announcement that it had no choice but to close after one of its “main distribution partners” was “not paying” the brewery for its beer. That partner was Bevana, the contract brewing and e-commerce service provider platform for small breweries, which is embroiled in a lawsuit with its bank.
Pontoon’s closing announcement in October was one of the first indications of trouble at Bevana to hit the mainstream. Pontoon signed onto the platform in May 2023 to expand its distribution and use Bevana’s e-commerce platform.
“We wanted this partnership to thrive and to grow and to put us in new states and get us into all these chains,” O’Keefe said. “They bragged about their sales force having all these years of experience and coming from all these big-name companies, and so we were really excited.”
During summer 2023, distributors’ requests for Pontoon’s fall seasonal, The Great Punkin’ Spice imperial brown ale, flowed in to O’Keefe and his team, who would redirect them to Bevana, which was responsible for taking purchase orders and telling Pontoon how much to brew.
Pontoon had projected it would need up to 150 barrels of the beer, but Bevana told the brewery that its distributors “didn’t want any limited-time offerings because they were heavy on them,” O’Keefe said. He added that Bevana was not compiling orders.
“After three months of not responding to it, you’re just telling me that, ‘Well, it’s too late now.’ That’s on you. That’s your fault,” he said. “The structure is the purchase orders. You put the purchase orders together. You send them to us. We make the beer.
“But they didn’t come through on their obligations when it came to that,” he continued. “We found out later that they were telling distributors that we were having production issues. Meanwhile, we were not having production issues.”
During the five months Pontoon and Bevana worked together, Pontoon brewed beer for the platform to distribute but was not compensated, according to the reorganization plan the brewery submitted to the court.
“In particular, CBV defaulted by failing to pay for product, causing delays, and ultimately refusing to order product while simultaneously cutting off [Pontoon’s] ability to distribute product,” G. Frank Nason, an attorney for Pontoon, wrote in the brewery’s reorganization plan. “The result was a loss of approximately 65% of revenues. [Pontoon] is owed approximately $289,239 from CBV for product, and has claims against CBV for losses in excess of $1.5 million. [Pontoon] is rejecting the brewing agreement and licensing agreement in order to secure distribution rights for its product.”
In November 2022, Pontoon opened a brewery in Tucker, Georgia. The new facility was the impetus to seek out the support Bevana said it would provide.
“In an era where a lot of people are facing a decline, we were facing tremendous growth,” O’Keefe said. “Demand was not an issue. We were struggling to meet demand. And so now we have this brand new facility that we built out to our specs and took way too long to build it. But we got there. And we realized pretty quickly that we needed help with specifically chains and expansion into new states.”
But that help never materialized, O’Keefe said.
“We saw zero, effort, results, whatever,” he said. “And I’m not even talking about instant results. We’re not new to this game. We know that it takes time and development.”
During the “volatile time” craft beer is experiencing, “any little piece of hope is big,” O’Keefe said, which is why Pontoon “bought whole heart” into Bevana’s services. He still believes the platform’s concept of licensing brands and selling them on behalf of breweries who brew products under contract is “fantastic.”
“But there’s no way I would ever want to work with them in any capacity,” he said. “It’s not a product problem, it’s a people problem. And that sucks because like I said, I think if they brought in maybe a different management team that has the experience and could have SOPs in place to have a functional operation, I think they would kill it.”
As Pontoon works through bankruptcy, it has closed the Tucker facility and “has initiated the process of liquidating” its equipment, according to the plan.
In 2022, distribution sales accounted for 51% of Pontoon’s business (33% in Georgia and 18% out of state), followed by taproom sales (38%), online sales (8%) and private events (3%), according to the reorganization plan. Without the brewing capacity of the shuttered Tucker location, Pontoon will be forced to overhaul its business plan.
“With a renewed focus, Pontoon Brewing will shift attention to its taproom and limited distribution,” the brewery wrote in a press release about the court-ordered cancellation of its Bevana contracts. “This strategic move includes an expansion of taproom releases, continued development of IPAs, the introduction of a new specialty IPA bar, barrel-aged stouts, fruited sours, well-refined lagers, non-alcoholic beers, ready-to-drink cocktails, and more.”
Conversations with head brewer Tyler Weddel during Pontoon’s closure in October gave O’Keefe perspective on the brand’s future. Together, the two took stock of what they liked about the business and what they didn’t, and identified things to change.
“It’s so hard for a brick-and-mortar, capital-intensive business like the brewing industry to pivot, and so not many people have the time, the money, the effort, and it’s hard to pivot while you’re in the middle of operations,” O’Keefe said. “With us being shut down, it allowed us to look at our business model, and really go, ‘OK, is this really what we want to do? Do we really want to fight for this?’”
O’Keefe decided to keep the Sandy Springs taproom due to its profitability and entrenched community of patrons, and shutter the Tucker facility. The Tucker brewery’s contents — including a complete 30-barrel brewhouse, several 100-barrel fermentation vessels, and office and taproom equipment — is up for sale in an auction that opens March 5.
“The current state of the market is these regional breweries are struggling,” he said. “It’s more local and it’s more limited distribution. So we’re like, ‘You know what? This is opportunity to change this.’”
With the exception of an -18% decline in volume between 2020 and 2021, Pontoon has recorded solid growth since 2018, according to estimates published in the Brewers Association’s (BA) New Brewer Magazine’s May/June 2023 issue. Its output increased +39% in 2019, +97% in 2020 and +7% in 2022, when it produced 4,800 barrels, according to the BA.
Pontoon aims to reenter distribution in May with Rainbow Smiggles, a Berliner weisse infused with fruit, candy and cereal.
A Contentious Split
In November, news broke that SouthState Bank, National Association, had filed a lawsuit against Bevana and its co-founders for breach of contract. The bank alleged that D9 Brewing – a sibling to Bevana under CBV – had sold some brewing equipment and failed to use the proceeds to pay down the balance of a loan that was in default.
News of the lawsuit brought Pontoon’s closure back into the discourse and O’Keefe confirmed Bevana was the previously unnamed partner whose withheld payments forced the brewery’s closure.
At the time, Bevana CEO Andrew Durstewitz told Brewbound that Pontoon owed the platform money, which he reconfirmed last week. However, Durstewitz said Pontoon “fraudulently omitted” Bevana’s debt from its bankruptcy filing and the company has filed “a series of motions” with the bankruptcy court.
No such motions are listed in Pontoon’s bankruptcy filing and Durstewitz declined to share documents with Brewbound. Durstewitz told Brewbound Bevana “assumed $200,000+ in wholesaler debt on behalf of Pontoon as to avoid their brand dying in the market.”
“We never agreed, verbally or in writing, to assume this debt, but were put in a no-win situation when they defaulted,” he said.
Durstewitz declined to provide documentation for these claims, saying the company did not want to “take any actions that will disrupt the legal proceedings.”
Nason, Pontoon’s attorney, confirmed that counsel for both companies discussed the filing in November, but Bevana did not file a claim.
“It could have appeared or filed a claim at any time, but chose not to,” he wrote in an email.
At issue is a $64,000 debt Pontoon owed to Best Brands, its Tennessee distributor, from a partnership with the NHL’s Nashville Predators. Pontoon was paying the debt in-kind with product, but when Bevana allegedly stopped paying Pontoon for the product, that became impossible.
Screenshots of text messages between O’Keefe and Best Brands owner Jason Eskind reveal that the distributor was waiting on details of a payment plan from Bevana, which told him the debt “was never disclosed” and “breached their contract.”
When Pontoon first signed with Bevana, O’Keefe said he disclosed all of the brewery’s debts to the company’s CFO, including the Predators partnership
“We had a total of about $6,000 owed to distributors for buy backs, marketing spends, spoilage, etc., that we had no problem paying outside of the fact that Bevana only paid us $20,000 out of the hundreds of thousands owed to us,” O’Keefe told Brewbound via email. “The ‘substantial’ amount they are referring to is our partnership with the Nashville Predators that we owed to Best Brands ($64,000 a year, to be paid in-kind), but they claimed the distributor is ‘forcing’ them to pay because we closed our doors because of them.”
As for the court’s rejection of Pontoon and Bevana’s contract, Durstewitz told Brewbound his company “intends to pursue all of its remedies to the full extent permitted under the bankruptcy law.”
“The rejection of an executory contract and license agreement is an extremely low bar or standard under the bankruptcy law. It allows debtors to presumably ‘get out of contracts’ that they believe are burdensome,” he wrote in an email. “CBV disputes that the underlying license agreement is burdensome and not a financially advantageous contract with Pontoon Brewing and has asserted as much.”
After the rejection was filed on February 23, Bevana has 14 days to contest it and 30 days to file for damages it has suffered as a result of the rejection.