ST. LOUIS — A local investor is offering $2.55 million to buy Urban Chestnut Brewing Co. and save it from closure amid bankruptcy proceedings, lawyers said Thursday.
Ladue-based Keg Holdings LLC and its owner Brian Travers made the initial bid to purchase Urban Chestnut just weeks after it filed for bankruptcy protection, claiming roughly $4 million in unpaid loans.
About half of those loans came directly from emergency federal COVID-19 loans, while the other portion was distributed by banks and backed with federal dollars, a lawyer with the U.S. Attorney’s office said in court.
A lawyer for Keg Holdings said they’re hoping to preserve a major player in the local brewing industry.
“We’re trying to keep one alive,†said lawyer Eric Peterson during a hearing Thursday.
It has been a rough several years for the brewing industry. Fallout from the COVID-19 pandemic and changing consumer tastes and habits have led to a 2% market decline for the first half of 2024, according to the Brewers Association, which represents small and independent craft brewers.
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Photo by J. Pollack Photography.
Earlier this year, O’Fallon Brewery quietly ceased operations earlier and last month put its equipment up for auction. Earthbound Beer on Cherokee Street announced Monday it would soon close.
Urban Chestnut was founded in 2010 and opened its first location in Midtown the following year. Three years later, it expanded with another large space in The Grove.
The COVID-19 pandemic weighed heavily on the business, Urban Chestnut’s co-owner David Wolfe said in a statement last month. Wolfe said they filed for bankruptcy to restructure without interrupting brewing operations and said they’d be helped by an investment partner, Travers.
On Thursday, more details about the relationship with Travers became known.
Urban Chestnut’s lawyer, Spencer Desai, said Keg Holdings planned to hire the company’s management team and take hold of operations. He proposed a timeline under which other prospective buyers would have until Nov. 25 to submit bids before a final sale hearing on Dec. 6.
Creditors and government representatives were wary of the speed.
“I think it’s appropriate that we not proceed too quickly,†said Joseph Schlotzhauer, the U.S. trustee monitoring the bankruptcy. “I don’t think the public really knows that the business is for sale.â€
And Joshua Jones, with the U.S. Attorney’s Office, said he had a duty to make sure taxpayers weren’t footing more than their share of the bill: He said the government could potentially be on the hook for $3.2 million to $4 million if the sale went through and Urban Chestnut no longer had to shoulder the debt.
Jones is the only person in his office working on that case, wading through hundreds of pages of documents in addition to balancing a large caseload. He said he needed more time to review the filings and talk with federal agencies.
“I am a steward of the taxpayer,†he said.
Judge Brian C. Walsh agreed to grant tentative approval for the bidding process with a scheduled review in three weeks. In the meantime, Urban Chestnut pledged to advertise the sale and continue to search for other buyers.
Keg Holdings has offered to help pay ongoing expenses to keep Urban Chestnut afloat as the bidding process continues and the company enters one of its down revenue periods during the holidays. A judge will consider that request at a later date.
Peterson, however, said time was of the essence.
“We’re not here for an infinite period,†he said. “We have our own interests here.â€
Thousands of beer lovers descended on the German city of Munich on Saturday for the opening of Oktoberfest. Some 6 million visitors are expected over the festival’s 16 days — up to 600,000 visitors each day.
