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Published in Food/Agribusiness
BarFly assets sold to previous investors for $17.5M in bankruptcy auction COURTESY PHOTO

BarFly assets sold to previous investors for $17.5M in bankruptcy auction

BY Tuesday, October 27, 2020 03:09pm

GRAND RAPIDS — BarFly Ventures LLC — the parent company of HopCat, Stella’s Lounge and Grand Rapids Brewing Co. — has sold its assets as part of a Chapter 11 bankruptcy reorganization.

Project BarFly LLC, a new operating company made up of previous BarFly investors Congruent Investment Partners and Main Street Capital, purchased the assets for $17.5 million. 

“We know the business extremely well from our experiences over the last five years. We strongly believe in each restaurant concept and intend to return the company’s focus to providing a unique, best-in-class customer experience,” Travis Baldwin, founder of Congruent Investment Partners, said in a statement. “Our goal is to focus efforts around the company’s key markets and ensure HopCat, Stella’s and Grand Rapids Brewing Company remain a thriving part of these communities.”

Congruent Investment Partners and Main Street Capital previously joined in providing BarFly Ventures with $25 million in mezzanine debt financing in September 2015 as the company rapidly scaled up its operations throughout the Midwest, as MiBiz previously reported. 

New owner Project BarFly submitted a stalking horse bid for “substantially all” of BarFly’s assets, which was approved by the U.S. Bankruptcy Court in the Western District of Michigan on Oct. 15.

BarFly filed for Chapter 11 bankruptcy in early June, citing $10 million to $50 million in liabilities and $1 million to $10 million in assets.

The company’s overly aggressive expansion of HopCat chains across the Midwest preceded the COVID-19 pandemic and widespread restaurant closures, as MiBiz previously reported.

Eleven HopCat locations are now operating with an increased focus on off-premise sales and takeout and delivery.

Main Street Capital Managing Director Nick Meserve said in a statement the new ownership group intends HopCat, Stella’s and GRBC to “succeed and very much believe the company can return to growth as the pandemic subsides. This is much-needed good news for the local community and restaurant industry as a whole.”

Ned Lidvall, CEO of the newly created Project BarFly, said in a statement: “The whole management team and I are very excited about the new owners. We think it’s a great fit for the company, and the energy and collaboration they bring will only enhance our recovery and growth. We are also thankful for our loyal guests and teammates – and vendor and landlord partners who have been working hard to make our progress possible.”

BarFly founder and former CEO Mark Sellers said in court filings in June that a series of factors led to the company’s filing for bankruptcy, including operating “during a time when nearly all casual dining concepts in the country are struggling as a result of macro- and microeconomic factors, such as rising wages, increased competition, and online third-party food delivery platforms.”

“During the past several years, the Debtors took on an overly-aggressive expansion process by building new HopCat locations that were both too large and geographically diverse, including locations in Florida, Illinois and Minnesota,” Sellers said in the June filing. “The ‘craft beer craze’ has also slowed down along with the uneven casual dining interest in a nationally struggling retail market.”

BarFly had also secured a $6.6 million Paycheck Protection Program loan in late April through the pandemic relief program created under the CARES Act. Oct. 15 bankruptcy court filings say the debtors in the case “shall use commercially reasonable efforts” to provide “documentation necessary to seek forgiveness of any amount outstanding” under the loan.

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