Fair State Brewing Exits Bankruptcy
Fair State Brewing Cooperative on Monday said it has exited Chapter 11 bankruptcy.
The news comes about seven months after the cooperatively owned brewery declared bankruptcy amid continued financial struggles brought on by the pandemic. It also comes on the eve of Fair State’s 10th anniversary in September.
Katherine Constantine, chief judge at the U.S. Bankruptcy Court for the District of Minnesota, issued an order July 30 stating that a modified reorganization plan put forward by Fair State has been deemed “accepted by all creditors and equity security holders.”
The company’s reorganization plan lays out payments to be made to several creditors. The plan also said that Fair State intends to renew its Northeast Minneapolis taproom lease, which is set to expire this month.
“We are incredibly grateful for the belief in our vision and products, which has been a constant source of motivation and inspiration during this time,” said co-founder and CEO Evan Sallee in a Monday news release. “That support has been invaluable, and we are excited to embark on this next chapter with renewed energy and optimism.”
There could be some significant changes on deck for Fair State’s corporate structure, too, per the reorganization plan:
“… Operating as a cooperative association has limited the ability of [Fair State] to raise capital even though there are regular inquiries about potentially investing in one aspect of [its] operations or another. One potential possibility is to divide the business of the Company into two entities, creating a corporate subsidiary (“Brewco”) that would be responsible for all of the brewing and packaging of products and selling the lion’s share of its brewed products to Fair State. With this structure, Fair State (“Oldco”) would continue as a cooperative but become an entity focused exclusively on taproom operations, sales, and marketing – leaving Brewco with the opportunity to generate economies of scale for production, financing and growth.”
Kenneth Edstrom, an attorney with Sapient Law Group representing Fair State in the bankruptcy case, said that the plan’s confirmation “gets the company out of bankruptcy by writing a new contract with the creditors.”
“It’s all over but the shouting and Fair State’s job is now to execute on its bankruptcy plan by paying the creditors as called for in the plan,” Edstrom said.
