HopCat files for Chapter 11 due to coronavirus losses, warns of 'giant wave of bankruptcies' in industry

The parent company of Michigan-based HopCat craft beer bars has filed for chapter 11 bankruptcy due to losses incurred during the coronavirus pandemic.

BarFly Ventures Founder Mark Sellers filed for bankruptcy protection as part a financial restructuring, saying that the company's revenues are down 100% and "we're essentially barely able to keep the lights on," the Detroit Free Press reports.

The news comes just a week after the company announced it was closing its Royal Oak location due to a landlord dispute, and about a week before the company plans on reopening its Michigan bars. Gov. Gretchen Whitmer issued an executive order on Monday that allows dine-in restaurants to reopen with some restrictions starting Thursday.

The company says it will continue to operate as usual and the restructuring "will allow us to emerge as a financially stronger company and enable us to continue serving our guests, team members, and other business partners for many years to come."

However, Sellers warned that he expects more bankruptcies for restaurants and bars in the near future.

"This is not unique to us," he told the House Regulatory Reform Committee. "There's going to be a giant wave of bankruptcies coming very, very soon."

Many restaurateurs say that federal coronavirus aid was especially ill-suited for the hospitality industry — one of the largest sectors of the economy — because the Paycheck Protection Program loan required restaurants to hire staff back. But with restaurants only open for takeout for weeks during the height of the pandemic, it didn't make sense to bring back staff.

And even when restaurants reopen for dine-in service on Thursday, they'll do so at only 50% capacity, which will further impact their revenue. That's why legislators have proposed a stimulus package specifically tailored to the hospitality industry.

HopCat plans to open its Michigan locations on June 13. The Royal Oak location is expected to reopen elsewhere in the city, though plans have not been announced yet.

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