BarFly Venutres LLC — the parent company of Michigan-based HopCat restaurant and craft beer bar concept — filed for Chapter 11 bankruptcy this week saying the coronavirus pandemic pushed the already-struggling chain over the edge. Despite the announcement, the chain plans to continue reopening its Michigan dining rooms on June 13, with Nebraska and Indiana restaurants to follow on June 22, in accordance with state guidelines.
The company said in court documents filed in the U.S. District Court for the Western District of Michigan that it had $1 million to $10 million in assets and $10 million to $50 million in liabilities. The company was already evicted from one out of its 17 locations, including company-owned The Grand Rapids Brewing Co. and Stella’s Lounge in Grand Rapids, Mich. BarFly is also in default to its landlords at other locations, Mark Sellers, founder of BarFly Ventures, reportedly told a state House regulatory reform committee on Wednesday. The committee was reportedly hearing testimony on legislation that would allow restaurants to provide alcoholic drinks for takeout or delivery.
Sellers also told the House committee that BarFly's revenues were down 100% and they were “barely able to keep the lights on.”
"As is the case with most restaurants, BarFly has faced a number of challenges in recent years, including increased industry competition and craft beer saturation," Sellers said in a statement about the restructuring. "However, we were meeting these challenges, and operationally the business was sound until the recent global pandemic pushed us into an unforeseen economic crisis and a 100% drop in revenue for almost three months. After an exhaustive examination of all options, we've determined that the Chapter 11 process is the best path forward to enable BarFly to focus on continued growth and transformation for the future."
Sellers went on to say that the bankruptcy filing should have “little to no impact” on their day-to-day operations and the company will continue to pay employee wages and benefits, as well as honor customer rewards programs and gift cards.
Pachulski Stang, Ziehl & Jones LLP and Warner, Norcross + Judd are serving as legal advisors to BarFly Ventures, and Rock Creek Advisors is serving as financial advisor and Mastodon Ventures, Inc. is serving as investment banker.
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