Hill Farmstead Associates Sue Tired Hands Over Investments

Discussion in 'Beer News & Releases' started by makalarch, Jan 9, 2019.

  1. makalarch

    makalarch Aspirant (234) Jul 31, 2011 Pennsylvania
    Trader

    https://www.goodbeerhunting.com/sightlines/2019/1/8/tired-hands-hill-farmstead-lawsuit
     
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  2. MNAle

    MNAle Meyvn (1,056) Sep 6, 2011 Minnesota

    Kum ba yah in action...
     
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  3. forum8417

    forum8417 Initiate (135) Feb 1, 2011 New Jersey
    Trader

    get the :popcorn: ready. should be interesting to see how this plays out. i wonder if we'll ever see posts of Tired hands visiting HF anymore?
     
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  4. jacincm

    jacincm Initiate (46) Mar 29, 2018 Pennsylvania

    Also worth noting that September 2018 cans of Karma Emulsion did not make any mention of Tired Hands
     
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  5. jmdrpi

    jmdrpi Poo-Bah (5,704) Dec 11, 2008 Pennsylvania
    Premium

    I am not a lawyer, but I'm not sure I agree with the article's author in the particular quote above. It sounds more like the HF guys were forced to cash out their equity, and didn't agree with the valuation:

    From the original April 2018 Complaint:
    https://www.courtlistener.com/recap/gov.uscourts.vtd.29041/gov.uscourts.vtd.29041.1.1.pdf

    Obviously we don't know many details about Tired Hands finances (how much debt they took on for the various expansions), and there are many way to valuate a company. But $7,500 for 0.5% would value the company at $1.5 million.

    Considering on an average week Tired Hands grosses about $100K in can sales (on top of their draft, growler, bottle and food sales), that doesn't seem right.
     
  6. Ranbot

    Ranbot Zealot (547) Nov 27, 2006 Pennsylvania

    At least this beer court case is little different from our typical trademark and discrimination cases.

    My feelings (since I am not a lawyer or expert on investor contracts) on this so far are that either....
    1) Tired Hands is hiding company profits from investors like Shaun Hill. -Shame on Tired Hands.
    OR
    2) Tired Hands wrote deceptive contract legalese that Shaun Hill didn't fully understand before investing. -Shame on Shaun Hill for being foolish, but shame on Tired Hands too for being a deceptive partner, even if they didn't break any laws. (legal right is not necessarily moral right)

    Either way I don't think Tired Hands gets out of this without looking bad. I guess there's a third option where the contract language was clear and Shaun Hill can go pound sand. But I doubt this because if the contract was clear Mr. Hill's lawyers probably would have told him as much and advised him to cut his losses.

    I'll be interested in what the courts decide or a settlement, but whatever the result is it probably won't impact me. I am just entertained. :popcorn: I don't trek to VT/Ardmore or scour local tap listings for either brewer's beers as it is. The average line-lifer buying their beer probably doesn't care about this.
     
  7. MNAle

    MNAle Meyvn (1,056) Sep 6, 2011 Minnesota

    The OP's link no longer works for me...

    Anyway, when I read the article this morning, I recall it stating that Tired Hands claimed the lawsuit has been dismissed with prejudice, and that the article author could find no recored of that in the court.

    So, either the lawsuit has been dismissed with no option to re-file, or Tired Hands is spreading misinformation.

    Sorry I can't quote it...
     
  8. William_Navidson

    William_Navidson Initiate (118) May 1, 2015 Pennsylvania
    Trader

    Link still works for me. Foster said that it is being dismissed, not that it had been. This could mean that she's just saying that she's confident that it will be dismissed, not necessarily misinformation.
     
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  9. tzieser

    tzieser Meyvn (1,002) Nov 21, 2006 New Jersey
    Trader

    If I squint and turn my head a little bit I can see a Trillium-esque public flogging in the near future :popcorn::sweat_smile:
     
  10. chipawayboy

    chipawayboy Disciple (398) Oct 26, 2007 Massachusetts

    Hard to get excited over this aside from the learning the interesting fact that two greet breweries had a financial relationship at one point.

    My biggest takeaway is who knew HF and their simple little logo have a creative director? Granted - that logo continues to be incorporated into increasingly more developed labels —but the whole vibe of the Greensboro Bend brewery facility/tap room/bottle room and brand - including their on-line presense is, in a word, “homegrown”.

    On another note — I wonder which of Shaun’s philosophy's themed beers best describes this now broken relationship? Certainly not Works of Love....anybody got any suggestions? :grin:
     
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  11. JackHorzempa

    JackHorzempa Poo-Bah (3,761) Dec 15, 2005 Pennsylvania
    Premium

    I too am not an attorney but the salient points from the suit appear to be:

    Section 10 alleges that Jean and Julie did not properly disclose a number of items:

    · Personal liability for taxes

    · Did not ‘highlight’ the redemption provisions

    · Failed to disclose that an investor’s return would be limited to half their original investment

    · Each of the above is a material misstatement or omission

    Section 11 details that for an investment of $5,000 the investors would have 0.5% equity investment in the Company.

    Section 14 details that the Company has been successful for the past 6 years but they failed to make regular and reasonable distributions of profit.

    Section 17 states that in 2017 the plaintiffs were told they had to accept a buyout – sell their 0.5% equity interest in the Company for $7,500.00.

    I have no purview into the financials of Tired Hands but I do know that over the past few years they have obtained a ‘shit ton’ of revenue solely from their weekly can releases and I suspect they have also obtained a ‘shit ton’ of revenue from on premise sales at their multiple location.

    It seems to me that Shaun Hill, Alex Peltz and Mike Ingrassin are simply looking for a monetary value that is truly consistent with 0.5% equity investment in the Company.

    Cheers!
     
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  12. jmdrpi

    jmdrpi Poo-Bah (5,704) Dec 11, 2008 Pennsylvania
    Premium

    This appears to be a history of the filings, which go back to April 2018:
    https://www.pacermonitor.com/public/case/24586619/Hill_et_al_v_Tired_Hands_Brewing_Company_et_al

    Most recent:
     
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  13. MNAle

    MNAle Meyvn (1,056) Sep 6, 2011 Minnesota

    Probably a result of me now being at work!
    When I read the comment about the dismissal earlier, I thought I would follow up on it, but since I was unable to get back to the actual article, I went from memory. Nuance was, therefore, lost.
     
  14. spicoli00

    spicoli00 Zealot (589) Jul 6, 2005 Indiana

    Sales is a bad indicator of value. You need something more akin to cash flow. They could have a $100M in sales but very little earnings.
     
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  15. chipawayboy

    chipawayboy Disciple (398) Oct 26, 2007 Massachusetts

    Let’s see — they’ve got 14 production workers...a facility in Ardmore PA...and sell all beers direct w no distribution to dilute profits. Sounds like a recipe for large profits to me.
     
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  16. JackHorzempa

    JackHorzempa Poo-Bah (3,761) Dec 15, 2005 Pennsylvania
    Premium

    Those sales are comprised of direct sales of 4-packs around $20 per 4-pack. There just has to be a lot of profit/earnings there.

    Cheers!
     
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  17. Ranbot

    Ranbot Zealot (547) Nov 27, 2006 Pennsylvania

    In addition to selling $20+ 4-packs from their back door that sell-out in less than a day, they distribute kegs local which disappear nearly as fast; and operate a popular tap room/restaurant. They would need to have incredibly bad financial management to not be making significant profits.

    You know what's a common occurrence in business generally? A new business owner not wanting to share profits with their initial investors, particularly when the business is more successful than expected [and thus payments to investors are larger than expected]. What's extra galling here though is Shaun Hill did more than just write Tired Hands a check; he gave them a lot of publicity they probably wouldn't have got otherwise (collaborations, festival invites, social media promotion, etc.).
     
  18. chipawayboy

    chipawayboy Disciple (398) Oct 26, 2007 Massachusetts

    Not to mention tips on how to brew hazy IPAs that don’t suck....
     
  19. mkh012

    mkh012 Zealot (566) May 7, 2015 New Jersey

    Is the implication here that TH's hazy IPAs suck, or that HF helped TH get better? Because the former definitely isn't true.
     
  20. JackHorzempa

    JackHorzempa Poo-Bah (3,761) Dec 15, 2005 Pennsylvania
    Premium

    I have my fingers crossed that Shaun Hill, et al. and Jean/Julie can come to an amicable agreement here and the lawsuit will go away.

    Cheers!
     
    #20 JackHorzempa, Jan 9, 2019
    Last edited: Jan 9, 2019
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  21. chipawayboy

    chipawayboy Disciple (398) Oct 26, 2007 Massachusetts

    I’m a big fan of both - I’m implying that Shaun may have shared some knowledge w/the TH gang.
     
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  22. JackHorzempa

    JackHorzempa Poo-Bah (3,761) Dec 15, 2005 Pennsylvania
    Premium

    And as an equity investor in Tired Hands it is likely this occurred.

    In all fairness the information exchange likely was a two way street. I drank a lot of Hill Farmstead beers 'back in the day' and while those beers were of high quality there has definitely been an 'evolution' in Shaun's beers notably from an appearance aspect.

    Cheers!
     
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  23. ECdOc

    ECdOc Initiate (86) Nov 9, 2004 Pennsylvania
    Trader

    Who cares, a bad actor is a bad actor. They might have done the same to all of the other minority shareholders as well, and if they did i would think this has potential to blow up if that's the case. Regardless, I'm glad things like this come to light as it exposes some dark secrets of those put up on a pedestal.
     
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  24. William_Navidson

    William_Navidson Initiate (118) May 1, 2015 Pennsylvania
    Trader

    Anyone know why the GBH article is based solely on the EDPA filing post-transfer? It looks like Tired Hands filed plenty of replies and the two parties have gone back-and-forth. Tired Hands absolutely could be in the wrong here (and it wouldn't be too out-of-character), but this article and the ensuing commentary is based solely on the complaint, a document where Hill is incentivized to both (1) frame the matter in a light as beneficial as possible to himself and to (2) utilize a "throw everything at the wall and see what sticks" approach... and where we don't hear from the defendants, even though -like I said before- there are plenty of previous filings.

    Is this just another example of shitty GBH practices, or is there something I'm missing? If anyone has access to the previous filings, I'm curious!
     
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  25. Oktoberfiesta

    Oktoberfiesta Aspirant (251) Nov 16, 2013 New Mexico

    Lawyer fees can't be cheap so we have to be looking at more than the 'doubling' of their initial investment ($2.5k to $5k), right? Even if they were looking at $20k back, lawyer fees have to be above $17.5k?

    Just speculating, how much do you think they have grown? The smaller $5k was if they met half of their projection. 40 investors all may be getting short changed some $30k-$100k, which is basically one weeks worth of can sales. So they may have been way too modest in their valuation. I don't understand why they wouldn't just pay it out fairly. But the difference between $300k back to 40@$7.5k to $2mil for $50k for 40 is vast. Almost worthy of a class action type lawsuit.
     
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  26. chipawayboy

    chipawayboy Disciple (398) Oct 26, 2007 Massachusetts

    Jack - show me a so-called NEIPA brewer who hasn’t brewed a clear beer and I’ll show you a failure.....
     
  27. spicoli00

    spicoli00 Zealot (589) Jul 6, 2005 Indiana

    I'm not saying they're right or wrong nor am i implying that they don't have substantial cash flows. I'm just saying revenue is not the "best" (or maybe preferred is the better word) way to estimate value.
     
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  28. JackHorzempa

    JackHorzempa Poo-Bah (3,761) Dec 15, 2005 Pennsylvania
    Premium

    By "clear beer" are you referring to brewing beers that are of the non-Juicy/Hazy variety?

    Shaun Hill produces non-Juicy/Hazy beers (e.g,, Mary) and Jean Broillet produces non-Juicy/Hazy beers (e.g., Trendler Pils).

    Cheers!
     
  29. jmdrpi

    jmdrpi Poo-Bah (5,704) Dec 11, 2008 Pennsylvania
    Premium

    The original location that opened in 2012 was (and still is) a very small (1500 sq ft) brewpub, mainly did bottles of saisons and other funky beers, only draft/growlers of hoppy beer. It wasn't until they opened their second larger brewpub (The Fermentaria, 13,000 sq ft) in 2015 and starting canning the hazy IPAs that they started printing money. They also have a barrel/foudre warehouse (confusingly called the Dispensary) and a General Store so they have been spending money too.

    If you aren't familiar you can check out their website: http://www.tiredhands.com

    **EDIT: I realized I referred to them as brewpubs - which by the industry standard verbiage they are. But to give you an idea of their general vibe - they used to have an arrogant write-up on their website about how their "Brewcafe" was NOT a "brewpub".
     
    #29 jmdrpi, Jan 9, 2019
    Last edited: Jan 9, 2019
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  30. jmdrpi

    jmdrpi Poo-Bah (5,704) Dec 11, 2008 Pennsylvania
    Premium

    I think his statement was a general one, that if a brewer hasn't already brewed classic styles, chances are they won't brew a good hazy beer either? If so, I would agree.
     
  31. William_Navidson

    William_Navidson Initiate (118) May 1, 2015 Pennsylvania
    Trader

    And, as of today (or at least this week), there's a notice posted in Fishtown for a permanent indoor/outdoor seated restaurant structure where they had their pop-up beer garden in the fall.
     
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  32. Squire

    Squire Poo-Bah (2,073) Jul 16, 2015 Mississippi
    Premium Trader

    Well, that's why we build Courthouses.
     
  33. kojevergas

    kojevergas Poo-Bah (8,058) Aug 15, 2010 Colorado
    Trader

    Will the fanboys let this affect their view of Hill? Does this make him less an enigma hiding out on rustic farmland and more an everyman in their eyes?

    Or is he still the Terrence Malick of beer, deified on a pedestal, the philosopher-brewmaster who keeps to himself and can do no wrong?
     
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  34. rightcoast7

    rightcoast7 Disciple (300) Apr 2, 2011 Maine

    Depends. Does being an enigmatic philosopher mean you should roll over and take it when others try to screw you financially? If so I guess he should lose that label.
     
  35. SpauldingSmails

    SpauldingSmails Initiate (131) Sep 11, 2014 Massachusetts

    Sales is a totally reasonable metric to use in understanding that Tired Hands is worth more than would be the assumed price at $7,500. Without needing to see a P+L, I would bet the house that the brewery is worth at least $50 million and probably $100 million. They may not be at the scale of Trillium or TreeHouse, but they are a major craft brand.
     
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  36. jojo2112

    jojo2112 Initiate (155) Sep 24, 2014 Pennsylvania

    I would be very surprised if it were that high.
     
  37. billandsuz

    billandsuz Disciple (372) Sep 1, 2004 New York

    I'm really only interested if that $5,000 investment was $5,000,000 and the amount in dispute has at least 6 more zeros if not more.
    Mostly serious.

    Cheers.
     
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  38. jmdrpi

    jmdrpi Poo-Bah (5,704) Dec 11, 2008 Pennsylvania
    Premium

    Did you read the article in the OP? If the compliant is taken at face-value, it's Jean Brolliet of Tired Hands that looks like the bad guy.

    Although his reputation in the Philly area has always been mixed given his penchant for coming off as arrogant and/or hypocritical in both interview quotes but also TH's social media presence. The classic was the aforementioned quote about brewpubs and double cheeseburgers, which used to be the first thing you read on their website: "Calling our original location a "brewpub" would be a gross overstatement of our brewery model......"

    But more recently he had another good one:
    https://www.beeradvocate.com/community/threads/tired-hands-october-2018.589712/page-7#post-6241929

    And if you're not familiar with their beer descriptions, while they've gotten more quantitative in the past year or so, they still regularly describe beers in such terms as "transcendental", "other worldly", etc.
     
    #38 jmdrpi, Jan 10, 2019
    Last edited: Jan 10, 2019
  39. erway

    erway Initiate (113) Jul 28, 2006 New Mexico
    Industry

    Unless they release their shareholders agreement, and they won't, none of us will ever know the true story. Speculating on who is right or wrong in this case is simply unfair to both parties. That being said, it is never wise to invest in any business without first having said documents looked over by an attorney that specializes in corporate law.
     
  40. JackHorzempa

    JackHorzempa Poo-Bah (3,761) Dec 15, 2005 Pennsylvania
    Premium

    On a related note I know of one person who was approached to be an investor. He read the agreement and ‘red-lined’ it with proposed changes as part of his negotiations for investing. This did not go over well with the managers of Tired Hands. They did not respond to his red-line comments and for an extended period of time refused to provide him with draft Tired Hands beers (he is a bar owner). Over time things become more ‘settled’ and he was offered draft Tired Hands beer to sell at his bar.

    Cheers!
     
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