Today DeMarb Brophy closed on the sale of the assets of a local kombucha company, NessAlla, inside of Chapter 11! The new owners are keeping it local, keeping it operating, and excited to take it to the next level. It’s a great example of some of the ways we can use bankruptcy to make things happen.
We filed the Chapter 11 case in early July, the day before the eviction hearing. The owners knew they wanted to head toward a sale, and that’s what we did. Filing the Chapter 11 allowed the company to do three things. First, it stopped the eviction process and gave the company some breathing room. Second, it allowed the company to continue operating and paying employees. Third, it signaled to the market that there would, in fact, be a sale in a structured process.
After a couple of months, we found a “stalking horse” buyer to get the sale process started. The stalking horse put in an offer to purchase, which we then got approved by the court. From there, we found other parties interested in operating the company going forward, and then scheduled the auction. The auction worked exactly as intended. Two parties participated and, at the end of the day, the sale price increased 70%. The company will pay its creditors five or six times more than it would have if the eviction had continued and the Chapter 11 had never been filed.
Going forward, the owners of the company are staying on with the buyer as employees. The buyer will keep operating in the same space. The craft kombucha will continue to be made in Madison. It’s a good day.
This sale process is just one of the ways we can use Chapter 11 to help struggling businesses. We know businesses out there are hurting. We’re hoping to reach more of them to share the power of having a strong, experienced and empathetic legal team on their side.