Fate Brewing Co. to shut down for good May 27

BOULDER — It’s not the Fate that anyone wanted.

Fate Brewing Co., which hoped to reorganize under Chapter 11 bankruptcy protection, will close its doors for good, May 27. Fate owner and founder Mike Lawinski announced the closure in a Facebook post Monday evening.

“After six and a half laps around the sun, this month will be the last leg of that journey,” Lawinski wrote. “We will be closing our doors following service on Monday, May 27th, 2019. Despite the daily joys we feel serving the community and connecting with our friends, the pressures of the business and the undeserved negative coverage have weighed on us too greatly. It is unfortunately time that we say goodbye.”

While Lawinski’s announced the closure Monday evening, the company’s fate was sealed in a series of moves by creditors over the last several weeks.

Fate filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Denver, Nov. 1, 2018, with the goal of reorganizing in order to repay creditors while stabilizing the business. But business continued to suffer, with the brewer recording losses for all but two of the months since the bankruptcy filing.

Nonetheless, Fate remained confident that it could work through its financial issues, filing a motion to assume its lease on its facility at 1600 38th St., April 15. But three formidable creditors lined up against the move: Independent Bank, the city of Boulder and Fate’s own landlord, 1600 38th St. LLC.

The creditors expressed serious doubt that Fate would be able to fulfill its obligations under the lease, potentially creating even greater liabilities.

Then, on May 8, creditor Independent Bank requested that Fate’s bankruptcy case be converted from Chapter 11 to Chapter 7, which provides for liquidation of the estate.

“Debtor will not be able to fund a plan and certainly will be unable to regain “solid financial footing” within a reasonable time,” Independent Bank’s attorneys wrote. “Debtor is presently delinquent on post-petition rent and post-petition taxes and, based on the Landlord’s Objection and the Boulder Objection, is not timely paying these obligations as they come due.

“Despite the fact that Debtor is not paying these critical expenses, Debtor continues to operate at a loss. There is nothing to show that Debtor’s financial circumstances will change such that it will have the ability to pay these expenses and operate at a profit such that it can fund a plan. In short, it appears that Debtor will not be able [to] operate [at] a profit in the future or otherwise fund a rehabilitation plan, especially after accounting for ongoing taxes and rent, which Debtor is presently not paying. Accordingly, Debtor has no reasonable likelihood of rehabilitation.”

A hearing on Independent Bank’s motion was set for May 30, but a motion by Fate May 13 made conversion irrelevant: Fate moved to dismiss the bankruptcy case entirely.

“The basis for the filing of a Chapter 11 was to allow Debtor to stabilize its business operations and, hopefully, bring its sales back to prior year levels which were very profitable,” Fate’s attorneys wrote in the motion. “It is apparent that this will be a difficult and time consuming endeavor and perhaps, not possible.”

Fate said that it became apparent that claims by federal, state and local taxing authorities made a successful exit from Chapter 11 unlikely.

“Based upon the Proofs of Claim filed by the State of Colorado, the City of Boulder, Boulder County, and the IRS, it is clear that Debtor could not have serviced the requisite debt payments to these taxing authorities through a plan of reorganization given current revenues.”

Fate said that after taxes are paid, it’s unlikely that any money would be left for unsecured, administrative, secured or priority creditors. Converting to Chapter 7 would only add to the problem, Fate said.

“… adding a layer of administrative expenses to a Chapter 7 case, will only exacerbate the problem and further harm secured creditors,” Fate’s attorneys said. “Under the circumstances, Debtor requests that its case be dismissed.”

The filing notes that, after negotiations with Independent Bank, the Colorado Department of Revenue, the city of Boulder and 1600 38th St. LLC, “all parties are in agreement that dismissal is preferable to conversion.”

Fate was founded in 2013 and quickly developed a reputation for quality craft beer coupled with good food.

“We worked hard to defy the perception of the “brewpub” by unifying craft beer, beverage and food in a strong harmony that was rarely seen in that format,” Lawinski said in his Facebook post, noting the accolades that Fate received over the years, both for its beer and its food.

Lawinski pointed to one business decision that proved, well, fateful: the company’s decision to purchase the former Avery Brewing Co. facility in Boulder in 2015.

“This expansion would allow us to increase our brewing capacity and expand to an off-site production and distribution center,” Lawinski said.

But federal licensing authorities had other ideas, denying a brewpub license to Fate, even though Avery had operated a brewery and taproom in the space for 20 years.

“This project, although mostly unknown to the public, was something that Fate continued to carry the burden of financially,” Lawinski wrote.

While shutting down is painful, Lawinski extended an invitation to Fate’s loyal followers: “We would love to see as many of our Fate friends and family one last time, and please don’t hesitate to share a story. “Through the grieving process we will undoubtedly face as this dream comes to an end, we welcome all the joyful memories.”

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