El Cajon Brewing Company, Chapter 11

Discussion in 'Pacific' started by evilc, Oct 22, 2012.

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  1. Srsly

    Srsly Aficionado (235) California Mar 21, 2010

    Hollaback Stout honies!
    ehammond1 likes this.
  2. pinkgrenade

    pinkgrenade Savant (345) California Aug 19, 2011 Verified

    poor house requires headshots when applying. looking for quality right there
    Eriktheipaman likes this.
  3. I think all breweries should require headshots for brewers. If they're not bearded or weird-looking enough, they should be tossed out the door.
  4. pinkgrenade

    pinkgrenade Savant (345) California Aug 19, 2011 Verified

    is that how you got your new job? you do have a good beard!
  5. A good time?

    Seriously though, in Northern Nevada, the liquor, porno and firearms are all under the same roof!!!
  6. DrtyBvrJuce

    DrtyBvrJuce Initiate (0) California Jan 17, 2013

    So...I'm ready for this weeks installment of drama.
    domtronzero likes this.
  7. Are you inferring that the "loan" from the City is not a valid lien?

    Kendrick said the owner has to pay back most of the $600,000. He told 10News the city will not lose money because the loan is secured by the equipment inside. He said it's worth more than the debt.

    "The city could repossess the equipment and sell it on the open market or the city could lease it to the new vendor," said Kendrick. - See more at: http://www.10news.com/news/el-cajon-brewing-company-struggling-with-bankruptcy#sthash.9POW0Upd.dpuf
  8. That's exactly what I am suggesting. The City filed a a motion for relief from the automatic stay to request permission to initiate legal proceedings to foreclose on the lien and take the equipment. I have copies of the loan documents and the lien, which are two separate things. There are some issues with the lien that might make it invalid.
  9. MacNCheese

    MacNCheese Savant (315) California Dec 10, 2011

    I wonder wha the State will do about the 540K they've loaded out since the Redev agencies are all abolished.
  10. That's difficult to say right now. The loan documents all state that the money came from the El Cajon Development Agency, but the lien is in favor of the City of El Cajon and that is what doesn't make sense to me. Maybe there's an agreement for the City to be the authorized agent for the state to collect the debt, but I didn't see anything in the court's file to say how El Cajon has standing to collect the debt.
  11. Either way, the landlord has no right to the brewing equipment.


    Implementation of AB 26: What Happens Next?

    Dissolution and Successor Agencies
    All redevelopment agencies in California dissolved as of February 1, 2012. AB 26 provides for so-called "successor agencies" to wind down the affairs of the dissolved redevelopment agencies. AB 26 designates the city, county or city and county that authorized the creation of the former redevelopment agency as the successor agency. However, such local governmental body had the option of electing not to become the successor agency, in which case an applicable local agency (defined as "any city, county, city and county or special district in the county of the former redevelopment agency") could elect by resolution to become the successor agency.2 If no local agency elected to serve as the successor agency, a public body referred to as a "designated local authority," consisting of a three-member governing board, was appointed by the Governor to assume the duties of the successor agency until such time as a local agency elects to take on the role.3 While most local governmental bodies assumed the role as successor agency, several did elect not to become the successor agency. For example, the Los Angeles City Council opted not to become a successor agency to its redevelopment agency because of the cost associated with continuing to manage the agency during the dissolution.
  12. Unless you have some superior knowledge about the terms lease that the rest of us do not, you don't have any basis for your statement landlord has not right to the brewing equipment. If the terms of the lease grant a lien to the landlord, and I've never seen a commercial lease without such a lien, then the landlord lien would trump the lien right of the City. That has been the law in California since at least 1975.

    As for link to the article about AB 26, that really tells us nothing about whether or not El Cajon has been designated as a successor agency or not. The quotes from guy on the El Cajon City Council are even in conflict as to to where the money came, so I don't see what conclusions can be drawn other than the left hand doesn't seem to know what the right hand is doing.
  13. I would love to see a lease where a tenant pledges equipment (not fixtures) that they don't own and the lender takes a subordinate position in the chain of title.
  14. From what I've seen of the facility, the brewing equipment falls under the legal definition of a trade fixture. if there is a trade fixture lien in the lease, then the lease would prevail. I don't know what you are including in the definition of equipment.

    However, a lien holder doesn't "own" the collateral. The lien holder owns a lien. if you have a car loan or a house loan, you own the house or car subject the lien. If you don't pay the car, the lender and repossess the car and auction it off. A lender can foreclose on a house for nonpayment. But the repossession or foreclosure occurs, the borrower still "owns" the equipment. I don't recall ever seeing a tenant pledge "equipment" to a landlord either.
  15. evilc

    evilc Initiate (0) California Jan 27, 2012

    I like cheese.
  16. Kyle2k10

    Kyle2k10 Savant (250) California Jul 14, 2010 Verified

  17. Just a short update today. El Cajon Brewing Company did not oppose the motion by the City to seek permission to repossess the brewing equipment.

    The trial on the eviction lawsuit is set for April 5, 2013 at 9:00 a.m.

    The fat lady isn't quite ready to sing yet, but she appears to be warming up her voice.
  18. tbadiuk

    tbadiuk Savant (425) Manitoba (Canada) Feb 9, 2009 Verified

    Ah, I was sad to this this thread drop off page 1, nice to see it's back! :p
  19. MacNCheese

    MacNCheese Savant (315) California Dec 10, 2011

    Man...this means I need to get back over there before it goes belly up.

    Now if only we'd be so lucky for a similar fate for Poorhouse. He's killed a company once, lets hope he can do it again.
  20. evilc

    evilc Initiate (0) California Jan 27, 2012

    ....but those girls will all lose their jobs - their dreams - their passionate dreams and love of beer....
  21. nanobrew

    nanobrew Advocate (645) California Dec 31, 2008

    As the end is drawing near is there any idea as to what happened to all of the money? He wasn't paying his lease or the loan (nor apparently for brewing supplies). Is this a case of terrible management, lack of business/customers, or did that money just disappear into someone's personal account.
  22. MacNCheese

    MacNCheese Savant (315) California Dec 10, 2011

    There's always the Tilted Kilt.
  23. evilc

    evilc Initiate (0) California Jan 27, 2012

    Are they as passionate about beer? PASSION BRO
    harrymel and MarkIntihar like this.
  24. If the City is repossessing the brewing equipment, some of the money that they loaned to ECBC was used to purchase it outright. That was probably a few hundred thousand. I haven't been there but I imagine that the tenant improvements would cost some significant money also. The original $600,000 is probably easy to trace for the most part.
  25. DoughIn

    DoughIn Aficionado (100) California Sep 27, 2009

    Well It certainly didn't go in my account.....

    By the way, this thread is very well known in the brewing community all over the US thanks to Beer Advocate, and everyone is on my side! Thanks so much to all the brewers who support me in L.A., San Diego, Phoenix, Montana, New Mexico, Illinois, Mexico, Sweden........etc etc
    and thanks to Beer Advocate.
    For a laugh:
    DB has listed himself in the BRD (brewers resource directory) as Brew Master!!!
    ROTFFLMAO!! He knows absolutely nothing about brewing and yet he is a Master Brewer?
    what a frikikin shame to the entire brewing community!

  26. How much is the brew system worth? What size?
  27. nanobrew

    nanobrew Advocate (645) California Dec 31, 2008

    I bet with all of the new breweries looking to open up they will not have any trouble selling the stuff. Hopefully it can find a good home in SD
  28. HopHead84

    HopHead84 Poobah (1,030) California Nov 29, 2006 Verified

    The support for you shown by the community has been nothing short of inspiring. I mean, people all over the world made their voices heard: Craftattle, and, uh, Craftattle. I'm sure there were others I'm forgetting.
    Eriktheipaman likes this.
  29. Agree. I just wanted to see how much the City might recoup. In that recent article, the El Cajon City Councilman seemed to think that the equipment was worth more than the loan ($600,000?).
  30. Nah. It isn't worth that much. Probably mid-200's. It is a good system without a ton of wear on it. but it isn't THAT expensive. It sucks, because I am sure they still owe on the equipment itself. Premier Stainless has a pretty good reputation for financing locals.
    mrkrispy likes this.
  31. DoughIn

    DoughIn Aficionado (100) California Sep 27, 2009

    Craftattle is real. An old friend of mine. As I said before, I travel all over the US brewing beer for Premier Stainless. I meet the brewers face to face and many of them have read this thread. Do you think I am full of shit HopHead84?
  32. MacNCheese

    MacNCheese Savant (315) California Dec 10, 2011

    Man, you have to fuck up pretty bad to be run out of El Cajon...be happy DoughIn that you won't be part of the bankruptcy.
  33. If the City is repossessing it (not Premier), it was probably paid-in-full. Otherwise, Premier would be involved in the BK proceedings to make sure that they got back their collateral.
  34. MacNCheese

    MacNCheese Savant (315) California Dec 10, 2011

    Does Premier finance? I would think a brewery would take a loan from the bank and the brewhouse would be collateral for said loan.
  35. According to carnevoodoo, "Premier Stainless has a pretty good reputation for financing locals" (Post #312).

    In this case, the City is repossessing the equipment (and no one seems to be protesting it). Therefore, their loan must be secured by the equipment.
  36. MacNCheese

    MacNCheese Savant (315) California Dec 10, 2011

    Huh, I was paying attention to DoughIn and totally missed Voodoo's posting. I R Dumbz.
  37. In Chapter 11 bankruptcy cases, a business debtor is supposed to file monthly operating reports and the most recent one on file for ECBC is form December 2012. The report shows $59,796.08 in gross income and $16,735.60 for costs of goods sold, mainly food and beer. The gross profit was $43,060.48. They listed the total expenses as $50,145.64 and that figure includes $7,251.22 allegedly paid for rent and payroll of $30,055.79. So they basically lost $7,085.16 in December. The expenses are itemized in detail and I'm no expert ant running a restaurant, so there isn't anything that jumps out and says "fraud". They just seem like normal business expenses to me. I have a copy of the December report if anybody wants to take a look at it and give us an informed opinion on it.

    In court filings, they had mentioned plans to start selling to other their stuff to other breweries. Whether that is enough to close the gap and start turning a profit is a question that probably won't be answered.
  38. The City of El Cajon filed a copy of the construction contract with the bankruptcy court. The original contract was $345,000 and the contractor was...wait for it...Meadows Construction. There were probably change orders that increased the cost of construction and probably a lot more unknowns like the architect's fees and building permit fees.
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