Parent company HopCat files for bankruptcy, restaurants to open on June 13
BarFly Ventures LLC, the parent company of popular craft beer bar and restaurant chain HopCat, filed for Chapter 11 bankruptcy on Wednesday.
The restaurant group also said it would reopen on June 13 in accordance with state guidelines. That means in-place and take-out food service at Michigan HopCat locations across the state – including Midtown Detroit and Ann Arbor, as well as Stella’s Lounge and Grand Rapids Brewing Co. in Grand Rapids.
“It’s a strange thing when we announce the reopening of our stores on the same day that we also announced Chapter 11, but it’s an exciting time for us because we’re so excited to reopen everything,” Mark said. Sellers, founder of BarFly. in 2008 with the opening of HopCat Grand Rapids. It closed all of its restaurants in mid-March once the pandemic struck, resulting in a 100% loss of sales in the past three months.
“Due to the COVID shutdown, we’re so overdue on our loan payments and our rents, we really don’t have a way out of this without a Chapter 11 reorganization.”
The sellers said the company’s financial restructuring is not expected to affect day-to-day business operations. Gift cards and customer rewards programs will always be honored.
“People think it’s a very negative thing, but it’s actually a very positive thing for us,” Sellers said. “It cleans up our bottom line and the customer and employees won’t notice any difference in the restaurant.”
When a leading restaurant group file for bankruptcy during a rare global pandemic – especially one with multiple locations, loyal customers and good press – it can seem like a curtain for a business in an already volatile industry.
“A long time ago, when a company declared bankruptcy, you thought it was done, that it was going bankrupt,” said Douglas Bernstein, head of business law development at the law firm Plunkett Cooney in Bloomfield. Hills. “Now that might mean they’re bankrupt, maybe not. There’s less stigma.”
Bernstein is pointing the finger at executives in other industries like airlines and automakers who have filed for bankruptcy but continue to do business as usual with the general public. And they can often come out stronger, with less debt and a greater ability to generate cash.
“In a Chapter 11, they are able to conduct business in the ordinary course,” Bernstein said. “They can’t do anything that isn’t their normal business without court approval.”
Among Barfly Ventures’ list of creditors is a Paycheck Protection Program loan of $ 6.6 million for COVID-19 relief from First Savings Bank and $ 1.7 million to Gordon Food Services. Sellers are not sure how much of the PPP loan they will need to repay, if any.
Bernstein and Sellers both say this is likely the start of a cascade of restaurant bankruptcy filings.
“This won’t be the last bankruptcy, it’s going to be ugly,” Bernstein said, although many landlords will try to work with their restaurant tenants.
“I can see a wave of bankruptcies in this industry over the next six months,” Sellers said. “I think right now (the companies) are trying to do what they can to survive, but it’s going to be difficult.”
Even before the pandemic struck and state-ordered closures followed, the region saw a wave of high-profile restaurant closures, including Gold Cash Gold, Bistro 82, Craft Work, Fort Street Galley and Granite City. Brewery at the GM Renaissance Center.
The virus put the entire industry on its heels, negatively affecting almost every business, especially those that couldn’t make sales without a delivery service. The announcement that HopCat Royal Oak will not reopen has been one of the most high-profile closures since the shutdown began. The nearby town tavern would remain closed, as would Midtown’s New Order Coffee.
Among those who could offer take-out, the percentage of sales they were able to recoup was a fraction of the norm. And the business that is done is carried out with a small team.
Even with the possibility of reopening next week, restaurants are likely to continue to struggle as, under state reopening guidelines, they cannot operate to the full capacity they did as recently as March.
“We’re now working on a completely different business model,” said David Ritchie, vice president of operations for Mission Restaurants, which manages Jolly Pumpkin restaurants in Metro Detroit. They reopened three of their restaurants in the Traverse City area last month.
“We have adjusted all of our budgets, we have re-evaluated all of our operating expenses, trying to work with suppliers to get favorable terms on all of our invoices.”
Vendors, for his part, claim that he will be able to break even or make a profit in all of his restaurants, even with 50% capacity, and he is trying to expand the food court. outdoors in some places, like the Detroit HopCat on Woodward.
Vendors said he was at fault at several of his restaurants and was kicked out of the Royal Oak HopCat location. After three years there, the company announced on social media last week that HopCat plans to find a new home in this area, and said he already had an interest from owners and developers in Royal Oak.
BarFly’s HopCat bars in Lincoln, Nebraska and Indianapolis, Indiana are scheduled to reopen on June 22.
Still, it’s a game of waiting to see how things turn out once the doors open, he said: “Even at that, I don’t know if all the chairs are going to be filled. Lots of people. worry about getting out. “