Judge says Evansville can package its finished beer

Modern Brewery Age, Nov 10, 1997

A federal bankruptcy judge ruled Friday that the company will have up to 45 days to sell the beer.

"We'll start calling workers back on Monday," said company president Steven Cook, who said about 76 employees will be recalled to do the work. The brewery's payroll has been as high as 92 employees.

The beer has remained in large vats since the financially troubled company closed its doors last month. When packaged, company officials estimated it would amount to about 12 million cans of beer.

If the judge had not allowed the brewery to package the beer, other choices included flushing the beer down the city sewers, trucking it out of the city to be boiled down and incinerated or applying it to farm fields.

Company officials argued that it would be more costly to dispose of the un-packaged beer than it would be to package and sell the product. They estimated it would cost from $600,000 to more than $1 million to dispose of the remaining brew.

Bank consultants estimated it would cost only $177,000 to discharge the beer in city sewers. They said utility officials had indicated a willingness to negotiate an agreement to dump the beer slowly into the sewers over a 100-day to 180-day period.

The brewery, which has such labels as Sterling and Gerst beers, filed for bankruptcy protection from creditors three weeks ago. Stockholders said they still hope to sell the company so it can continue making beer.

"If we would get fortunate and have a sale, everybody would be happy," said Bankruptcy Judge Basil Lorch. "Isn't it important to keep the labor force intact if you're going to try to sell this?"

National Bank of Canada, the brewery's main creditor, opposed the temporary reopening of the facility. The bank, which claims it is owed about $2.3 million, argued that the 45-day delay would only allow the company to spend down assets that could be sold to pay off the money owed to the bank.

John Griffith, the bank's attorney, said the company is only delaying the inevitable closing of the outdated brewery.

"It's purely an economic choice," said Griffith. "It's simply too late for the company to survive."

Cook acknowledged there were no potential buyers in the wings, but he said it may be possible to line up a buyer within the next 45 days.

Last month, plant officials declined a potential buyer's request for more time to come up with $300,000 in earnest money.

The judge also ruled Friday that workers at the brewery will receive the money that should have gone into their 401(k) retirement plans. Company officials acknowledged about $26,000 in 401(k) payments were used to pay expenses over the past three months rather than invested in the retirement plans. (See story below)