Corporate law is so strange.
It seems to be less corporate law than plain and simple shenanigans.
I suppose it underscores the fact that you always need to be careful who you partner with. Friends and family are not always the best bet.
Kinda sad to see since they opened with some fanfare, but at least for now it doesn’t look like it will tank the brewery.
I’ve never really gotten on board with their brews, though. Tried one or two when they first came out. They should package a mixed 12 pack, like the Folly Pack, and then maybe I’d do it.
I was referring to going to Delaware to form into a single entity to operate as majority owner. It’s strange that this is allowed.
Got it. Delaware is a very friendly state to corporations and has many many out-of-state corporations incorporated there. You go where the laws are favorable, all things being equal.
Oh, I highly recommend the dark lager with ancho chilies in it. Very very tasty. I really like their Pils as well, however I have bought it and had nothing but skunk. So, there’s that.
I would be very sad if I couldn’t get that dark lager any more.
To some degree I find this educational to all those that are jumping on the bandwagon to open breweries. As people find partners and investors that they think are in it for the right reasons, care needs to be taken to prevent these types of things along with levels of trust you place in those coming on board.
It is unfortunate as this brewery took off quite well and in less than two years began building out a larger brewery to handle demand and growth and now have to deal with underhanded business dealings by some of those involved.
I doubt it will sink them but it will be interesting to follow.
Ownership in small businesses is messy stuff. Frequently you get too many chiefs and no indians or the right amount of chiefs but they are assholes. The other big reason why these issues crop up is people rushing to create a business without having the right combination of expertise and experience to keep the business on the right path. Things go wrong and everybody is pointing fingers at each other. Then shenanigans begin.
What allows these issues to turn into nasty and expensive legal fights is almost always the lack of an effective organizational document. I don’t draft operating documents for businesses very often but I do litigate these disputes. One of the dumbest things you can do is pump a lot of money and time into a business but spend $300 online for some generic operating document. I don’t know if that is the case in the story above but the operating document should have limited how the owners could transfer shares, who shares could be transferred to and how the transfer affected the other owners.
I had the wit with dinner at Xoco. I liked it okay, but not enough that I’ve ever bought a sixer.
I saw this interesting interview with one of the founders today. It’s only one side of the story, of course.
Hey, thanks for sharing that, it is only one side but it’s also the side that hasn’t been heard from since this really started, kind of cool…
He’s absolutely right, the way they structured the partnership was terrible and led them down the path they followed. The buy out provision was just awful.
I don’t think a put/call provision is uncommon. Actually, I think it’s a somewhat standard and simple mechanism to plan for the ultimate dissolution of a partnership. It does give more power to whichever side has greater financial resources, but the nature of the provision should result in a buyout price that is relatively fair.
Of course, I have not seen their documents and don’t know what quirks their structure might have, but “awful” is a pretty strong indictment.