USA, PA: Rivertowne Brewery up for bankruptcy sale

Rivertowne Brewery and Tasting Room, a craft brewery in Export, and its four associated restaurants in Allegheny and Westmoreland counties is expecting interest from at least six potential buyers when it goes up for sale next month, according to filings in U.S. Bankruptcy Court in Pittsburgh.

About 240 other potential buyers, many with experience in the food and beverage industry, have been notified of the pending sale, according to filings in Rivertowne’s bankruptcy case.

Bidders have until 5 p.m. Oct. 10 to submit offers, which will be reviewed to determine who is qualified to make the purchase, said Daniel Schimizzi, a Pittsburgh attorney representing Rivertowne in the Chapter 11 bankruptcy case filed in May. The brewery and restaurants on Pittsburgh’s North Shore, North Huntingdon, Monroeville and Verona can be sold separately or in a package deal, Schimizzi said.

Bidding for the brewery will start at $1.35 million, which is the amount submitted by Gordon Brothers Commercial & Industrial LLC of Boston. As of now, Gordon Brothers, an advisory, lending and investment firm, bid only for the brewery, other unidentified assets and possible liabilities such as contracts and leases.

A closed-door auction for qualified bidders will be held Oct. 12 and an open hearing in bankruptcy court is planned for Oct. 16, Schimizzi said.

Cal Shusta, a spokesman for Gordon Brothers, couldn’t be reached for comment. Christian Fyke of Monroeville, who founded Rivertowne in 2007, could not be reached for comment.

If Gordon Brothers does not want the restaurants, Rivertowne wants the authority to sell those properties, which would offer the best chance for workers to continue to have a job, court documents stated.

Rivertowne has about 150 employees. It continues to operate while protected from its creditors. Debtors are owed between $1 million and $10 million. They include the Pittsburgh Pirates, who were owed $271,000; the Pittsburgh Penguins, owed $125,000; and S&T Bank of Indiana, which was owed $103,380, according to court filings.

The businesses are owned under the names of Fybowin LLC and three interlocking companies. Fyke owns almost half of Fybo Management Inc., and has stakes in Rivertowne North Shore, Monroeville Pour House and Brewery, Rivertowne Pub and Grille in North Huntingdon and Rivertowne Inn in Verona.

Rivertowne became a victim of increased competition in the beer business, which cut its market share, the company stated in court documents. It tried to generate more revenue beginning April 2017 by brewing new craft beers, conducting a marketing blitz to attract new customers and partnering with local establishments to create customized beers. Those efforts failed to generate enough money to stave off bankruptcy, and sales have not grown enough to fund a reorganization plan to allow it emerge from bankruptcy and remain open.

Competition among restaurants and brewpubs is strong in Western Pennsylvania, and there is a shake-up in the craft beer industry nationwide, said Sean Casey, who has operated the popular Church Brew Works in Lawrenceville since 1996.

Brewpubs that offer customers their own custom beer are competing not only with other brewpubs, but other restaurants. There are about 30 breweries in the region competing for patrons, Casey said.

“There’s more tap rooms opening up with a food truck,” Casey said. “There’s so much saturation” in the market.

The Brewers Association of Boulder, Colo., said craft brewery sales continued to grow in 2017 at a rate of five percent by volume. Craft beer has captured 12.7 percent of the U.S. beer market by volume and craft beer production grew the most for microbreweries.

Pennsylvania ranked first in barrels of craft beer produced last year — 3.7 million — from 282 craft breweries statewide, according to the Brewers Association, a trade group for small and independent breweries. The state has nearly three craft breweries for every 100,000 adults of legal drinking age.

While craft beers are localized, Casey said national beer producers are buying regional craft breweries. That puts the local breweries, with less resources, at an unfair advantage in terms of marketing and production, he said.

“It’s pretty hard for Rivertowne to compete against Bud,” Casey said, referring to Belgium-based beverage giant Anheuser-Busch InBev. The company may brew its craft beer at the same brewery where it makes national products, Casey said.

“The big boys keep gaining,” Casey said. Their strategy seems to be “if they can’t beat’em, let’s buy them.”

26 September, 2018