Empire is looking to sell off much of its property and assets in order to reorganize.
Owner David Katleski told NewsChannel 9: “We are not closing in Caz. This is a reorganization and will not affect operations. This is a very good thing for Empire.
According to bankruptcy papers filed with the court, Empire Farmstead Brewery began to struggle financially before it even opened its doors in 2016.
In the months leading up to the actual opening, Empire suffered a number of delays and cost overruns in the construction of the brewery.
Delays resulted in financial shortfalls due to lack of revenue, and cost overruns increased secured debt significantly beyond initial forecasts.
Despite these setbacks, Empire was able to cover its secured debts and operating expenses.
From the fourth quarter of 2016 to the second quarter of 2017, Empire suffered from a wild yeast infection which caused a second fermentation of the bottled beer. The second fermentation eventually made the beer sour.
It took a long time to locate the source of the wild yeast infection and prevent it from recurring.
During the months of correction caused by the wild yeast infection, all bottled beers had to be removed from distribution.
The wild yeast infection and its aftermath added to construction delays and increased secured debt, while causing financial dilemmas that have plagued the Empire ever since.
In 2017, Empire began working and negotiating with its secured lender, Community Bank, to keep Empire alive as it continually sought to actively sell or refinance debt.
At the bank’s suggestion, Empire retained the services of an investment banker, Glendale Capital Partners, who specializes in marketing and selling breweries.
Between November 2017 and June 2018, and after shelling out thousands of solicitations, the investment bankers were unable to secure a written offer to purchase acceptable to Empire as well as Community Bank.
In December 2018, Empire was barely able to cover its operating expenses.
A neighbor of Empire Farmstead Brewery, which used the spent agricultural by-products of beer to feed a herd of cattle, expressed interest in buying its assets.
This interest turned into months-long negotiations, which eventually resulted in an acceptable offer for Empire and Community Bank to purchase Burnett Dairy Cooperative.
On July 2, Empire Farmstead Brewery and Burnett Dairy Cooperative entered into an asset purchase agreement. Burnett is offering to buy nearly all of the brewery’s assets, including the tasting room, for $3.25 million.
The brewery’s largest unsecured creditor, according to the Chapter 11 filing, is Community Bank of Olean, NY. He holds the first mortgage and is owed. $9.25 million.
Among the list of other unsecured creditors who have the 20 largest unsecured claims are:
- Great Western Mailing of Toronto (owed $307,852)
- Syracuse Feldmeier Equipment ($295,386)
- Syracuse East Gerharz Gear ($246,829)
- GEA Mechanical Equipment of Northvale, NJ ($126,000)
- Madison County ($100,422)
- Harris Beach Law Firm ($85,728)
- MENA from Milwaukee ($57,599)
- CNY Enterprise Development Corp. from Syracuse ($54,321)
- Greater Syracuse Business Development Corporation ($54,321)
- Huen Electric of Broadview, NY ($53,045)
- Atlanta Graphic Packaging ($45,765)
- Minneapolis Gamer Packaging ($41,582)