The recent bankruptcy of BrewPublik reveals the Charlotte startup’s deep-rooted problems

The recent bankruptcy of BrewPublik reveals the Charlotte startup’s deep-rooted problems
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BrewPublik was once celebrated as a success story in Charlotte’s startup scene. But the company’s pre-bankruptcy boom belies its deep-rooted problems that continue to weigh on former customers and employees.

BrewPublik boasted qualities stereotypical of a modern young startup — a millennial CEO, craft beer, service on demand, growth from venture capital and business in Silicon Valley. The company’s achievements have been chronicled in national publications like the New York Times and Huffington Post, as well as in its hometown paper, the Charlotte Observer. BrewPublik’s CEO Charlie Mulligan wrote a number of first-person essays in the Agenda over the years, too.

On September 17, though, BrewPublik filed for Chapter 7 bankruptcy protection.

After the Agenda’s initial story about the bankruptcy last week, several former employees, investors, customers and readers reached out to share their own Brewpublik experiences.

Interviews with those people reveal a few common complaints: Late payments and paychecks, outstanding invoices, poor communication and general mismanagement.

In many cases, the unpaid debts amount to less than $5,000. But for small businesses, even a small amount can sting.

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“It screws the little guy,” said Kristian Pedersen, president of Charlotte-based CBG Craft Services, a customer with BrewPublik since the company’s early days.

CBG (an acronym for Craft Beer Guys) installed kegerators and helped BrewPublik with keeping tap lines clean on a monthly basis.

Pedersen estimates BrewPublik still owes CBG between $1,000-$5,000. CBG received no advanced warning of BrewPublik’s decision to file bankruptcy and end its relationship with CBG, he added.

“All of a sudden there was no communication with them whatsoever. The card we had on file with them was declined,” he said. “It left a sour taste in my mouth.”

One Charlotte brewer, Lenny Boy owner Townes Mozer, said he hasn’t been able to get a hold of Mulligan in months. For years, Lenny Boy supplied craft beer and kombucha to BrewPublik, mostly for delivery to local WeWork offices.

Mozer says BrewPublik still has an unpaid balance of about $3,000. As the debts accumulated over the last few months, Mozer says, Mulligan started offering a number of excuses about late payments, including that the check was in the mail.

“He would BS about payments,” Mozer said.

“I told my business partner, ‘dude, I don’t want to do business with these people anymore. It seems super sketchy and shady.’ Come to find out this is what’s really going down.”

beer in office or house

It wasn’t the ending anyone envisioned just a few years ago.

In May 2015, the company drummed up public intrigue in its early days in Charlotte by hosting a promotion called #SpringCleanMyBeer, during which BrewPublik swapped out customers’ old crappy beer for local craft brews. A few weeks later, it hosted a low country boil, using the old beers as an ingredient.

BrewPublik evolved from delivering curated craft beverage orders to customers’ doorsteps in North Carolina to delivering to the offices of major companies throughout Silicon Valley, including WeWork, Facebook and Google.

In BrewPublik’s most recent bankruptcy paperwork filed Wednesday, only two of the non-government entities listed as creditors are Charlotte businesses: Lenny Boy and Stephen Gould Corporation, a graphic designer who could not be reached for comment.

It’s unclear exactly how many creditors BrewPublik has; Mulligan’s attorney, Travis Sasser of Raleigh, couldn’t be reached, either.

John Woodman, a bankruptcy attorney with Essex Richards in Charlotte, considers it best practice to include “any and all individuals and entities that you believe you may owe money to” when filing Chapter 7 or Chapter 11 bankruptcy. Woodman is not involved in BrewPublik’s bankruptcy.

“The Bankruptcy Code requires notice to all parties but my best practice with clients, and I advise them, that they need to list everybody and anybody that they think may have a claim against the company,” Woodman said. “Out of an abundance of caution even if it is for notice purposes only.”

For anyone who thinks they are owed money but who does not appear in the filing, it’s still possible to get reimbursed without the help of an attorney. (Several suppliers the Agenda interviewed didn’t have attorneys because the cost of hiring one outweighed the total debt BrewPublik owes them.)

Those folks, Woodman said, will need to file a proof of claim with the bankruptcy court along with some supporting information to support the claim.

For BrewPublik, the decision to file for bankruptcy instead of simply shuttering the business stemmed from the fact that its reported debts far exceeded its assets.

According to BrewPublik’s bankruptcy filing, the company’s debts were somewhere in the range of $100,001 to $500,000.

The exact figure is unclear: “I don’t have that (number) in front of me,” Mulligan told the Agenda this week. The filing indicated that BrewPublik’s assets were less than $50,000.

“I didn’t want to be in a position where I was personally, as the leader, picking and choosing favorites about whose obligations got satisfied. I didn’t want to try make promises that I may or may not be able to deliver on,” Mulligan said in regards to his decision to file for bankruptcy.

For Alex Moore, working at BrewPublik combined two of his passions: Craft beer and tech. Moore oversaw BrewPublik’s West Coast operations in San Francisco for about a year and a half.

One of the biggest problems, Moore said, was the fact that BrewPublik would start working with a brewery, accrue thousands of dollars of debt with that brewery, fail to pay off the remaining balance and then “essentially ghost them.”

“It was rob Peter to pay Paul. That’s how the company operated,” Moore said.

Another former employee, Brandon Reed, who oversaw BrewPublik’s East Coast operations, described the company’s practices similarly.

Reed, a Charlotte resident, was with BrewPublik until the end. Mulligan oversaw the company’s finances, making it harder to understand fully what was going on until it was too late, Reed added.

“It’s not fair to those people, those small businesses, that got screwed over basically,” Reed said.

Mulligan says anytime BrewPublik created an invoice or ordered products, “we had 100 percent intention to pay.”

If any outstanding balance wasn’t paid, well, that was why the company filed for bankruptcy, he added.

Jon Verna, founder of Harmonic Brewing in San Francisco, describes a whack-a-mole approach to payments he experienced with BrewPublik. The brewer started working BrewPublik about three years ago and would use the company to distribute a few kegs of beer per month to offices throughout Silicon Valley.

BrewPublik would fall behind on payments, pay them down in to order to order more beer, then fall behind again, Verna said. Harmonic is listed as a creditor in BrewPublik’s bankruptcy filing. BrewPublik still owes the brewer $2,685, recently filed paperwork shows.

San Francisco’s craft-beer scene is tight knit, Verna said, much like how Charlotte’s is. He considers BrewPublik’s behavior a sort of betrayal.

“As a small business, it’s as much about the people as it is the beer. That broken trust is about as hard to take as lack of payment,” Verna said.

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