Half Lion Brewing is in the middle of a Chapter 11 bankruptcy in an effort to reorganize and possibly reopen Half Lion Public House in Kent and its brewery in Sumner.
The company filed for bankruptcy in November after unexpectedly closing in October. Half Lion Public House rents restaurant/bar space at the Riverbend Golf Complex from the city of Kent.
“Half Lion’s bankruptcy is working its way through the court system,” Kent City Attorney Tammy White said in a Dec. 18 email. “The Chapter 11 bankruptcy process is designed to give businesses the opportunity to reorganize their debts, secure additional investments and stabilize business operations. Half Lion filed its bankruptcy petition on Nov. 9. After filing, Half Lion has 90 days to consider its options and propose its plan for reorganization.”
Half Lion anticipates timely filing its plan of reorganization on or before Feb. 7, 2024, according to Western District of Washington/U.S. Bankruptcy Court documents.
“Currently, all we know is that Half Lion is exploring with its attorneys what options it has available, which could include a proposal to continue to operate at the Riverbend Golf Complex,” White said. “The city will have a better understanding of Half Lion’s intent once it files its proposed reorganization plan with the bankruptcy court for consideration.”
Half Lion Public House, 2019 W. Meeker St., opened in 2019 and just six months later had to shut down due to the pandemic. In 2022, its first full year of operation, the restaurant/bar made a profit on its operations. But other company debts led to the closure.
“The city has retained an attorney experienced with commercial bankruptcy, and that attorney has timely prepared and filed the city’s formal proof of claim concerning debt owed to the city by Half Lion,” White said.
That proof of claim is for $21,341, according to city documents filed Dec. 6. Since the claim is based on a lease, the city lists $42,000 as the amount necessary to cure any default as of the date of the petition.
“Keep in mind, however, that the proof of claim articulates only those amounts owed to the city as of the date of the bankruptcy filing,” White said. “In order for Half Lion to assume the city’s lease for the purpose of continuing operations, or for the purpose of assigning the lease to a potential buyer, Half Lion will be required to cure all amounts owed under the lease at the time of assumption, including additional amounts to be determined that will establish adequate assurance of future performance by Half Lion or any assignee of the lease.”
Half Lion signed a 10-year lease with the city of Kent in 2019, plus three five-year options to renew, at a rent of $3,000 per month or $36,000 per year, with increases based on the Consumer Price Index.
In the meantime, White said, the city is exploring what options it may have available to restore food and beverage service at Riverbend, which features an 18-hole golf course and a driving range.
According to bankruptcy court documents, Half Lion anticipates funding the reorganization plan from regular business income. The company anticipates proposing a plan of reorganization which will pay all allowed administrative claims, secured claims, priority claims and some unsecured creditors.
Court documents describe Half Lion as a small business debtor and its aggregate noncontingent liquidated debts (excluding debts owed to insiders or affiliates) are less than $3.02 million. The company’s estimated assets are $100,000 to $500,000.
Half Lion has $1.3 million in liabilities based on claims. The company had gross revenue of $570,000 to $698,000 in each of the last three years, according to court documents. Owner
Jason Nelson received $75,000 in wages in the last 365 days as managing member and his wife Katie Nelson was paid $42,850.
Half Lion’s largest debts are business loans, including $248,000 with OnDeck Capital in Utah and $149,990 with Parkview Advance in Connecticut.
Half Lion also faces a civil lawsuit filed June 27, 2023 in King County Superior Court by The Baseball Club of Seattle (Mariners) seeking $80,000 from Half Lion, according to court documents. Half Lion agreed to pay $200,000 to the Mariners for sponsorship signage in 2021 at T-Mobile Park and sales of its beer. Half Lion has paid $120,000 of that fee.
Half Lion counter sued the Mariners for more than $100,000 claiming the Mariners didn’t live up to their advertising promises. Filings about the case continue in court. A trial date has been set for June 24, 2024.