Popular coffee and cafe company files for Chapter 11 bankruptcy

A mixture of distressing economic factors forced a couple of coffee cafe chains and roasteries to file for Chapter eleven protection to reorganize or once in your time Chapter 7 liquidation if all is lost.

The commercial issues that almost all debtors within the coffee business blame for their financial distress are the lingering effects from the Covid-19-19 pandemic, a high interest-rate environment, rising inflation, and yet another huge problem – a sixty five% extend in imported coffee bean prices since January 2021, reported by Food Manufacturing.

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Netherlands-based global coffee bean supplier Mercon Coffee Corp. on Dec. 7 filed for Chapter eleven protection within the U.S. Financial disaster Court for the Southern District of New York to are taking a look for for for a sale of its assets, wind down its operations and pursue a liquidation plan, in accordance with court filings.

The coffee supplier said it faced headwinds in up to this point years, including a global impact from the Covid-19-19 pandemic and a decline within the market price for coffee, in accordance with bankruptcy filings.

Mercon said it'd are taking a look for for for $forty million in debtor-in-possession financing from its pre-petition lenders to pay operating expenses, finance its Chapter eleven case and to pursue a liquidation plan.

The debtor in court papers reported lower than $eleven.8 million in cash reachable and $363.three million in funded debt obligations, including $7.5 million owed to Starbucks.

Related: Renowned fast-food burger chain files for Chapter eleven bankruptcy

Coffee cafe and roastery operator Cottonwood Coffee of Brookings, S.D., on July 2 filed for Chapter eleven  within the United States Financial disaster Court for the District of South Dakota, likely suffering lingering effects from the Covid-19-19 pandemic and rising coffee prices.

Switchback Coffee Roasters of Colorado Springs, Colo., filed for Chapter eleven bankruptcy protection on Aug. 19 in U.S. Financial disaster Court for the District of Colorado. Switchback Coffee reported having $50,000 to $a hundred,000 in assets and $Five hundred,000 to $1 million in liabilities.

The company had not commented on why it needed to file, alternatively the upward push in coffee prices and Covid-19-19's effects are good bets as the causes. The company was still taking online orders and appears to be operating fully.

Inside the filing, the corporate said that funds can be on hand for unsecured creditors. Switchback also noted that its assets "consist of perishable goods or assets which may quickly deteriorate or lose value without attention."

Red Bay Coffee files for Chapter eleven bankruptcy

In the tip, coffee cafe chain Red Bay Coffee on Aug. 29 filed for Chapter eleven bankruptcy to reorganize as it has suffered a prolonged-term impact from the Covid-19-19 pandemic and rising costs of two court cases. Higher coffee-bean prices likely contributed to the corporate's distress as well.

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The Oakland, Calif., company listed about $250,000 in assets and $three.three million in liabilities in its petition, World Coffee Portal reported. The company reportedly had a net loss of over $850,000 from January to July 2024.

Red Bay Coffee, founded in 2014 by Keba Konte, faces high costs of a sexual harassment lawsuit filed in 2018 and breach of contract litigation.

The coffee company currently operates six coffee cafes, located in Oakland, San Francisco and Berkeley, Calif.; a coffee roastery in Oakland, and a coffee van.

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