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Austin's Celis Brewery files for bankruptcy, avoids foreclosure

Arianna Auber
An employee works in the brewhouse at Celis Brewery in Austin on June 14, 2017. The brewery filed for bankruptcy protection on Monday.[JAY JANNER / AMERICAN-STATESMAN/FILE]

Austin's Celis Brewery filed for bankruptcy protection on Monday, a day before its building and equipment were scheduled for auction to satisfy liens against the financially struggling craft beer brand.

In total, Celis is more than $10 million in debt, court filings show, owing money to a number of entities including Amplify Credit Union.

The Chapter 11 protection means the North Austin brewery and its parent company, FFBC Operations, have avoided foreclosure. Celis plans to continue operating out of its 22,000-square-foot facility at 10001 Metric Blvd. According to bankruptcy court documents, Celis intends to reorganize or to pursue a sale of the company to new ownership, perhaps both.

That's still being figured out, Celis Brewery lawyer Eric Taube said.

"We are talking to an investor. If those discussions or discussions with other potential buyers don't work out, we may try to do an auction. But that's not our current goal," Taube said Tuesday.

A May article published by craft beer news outlet Brewbound noted a possible sale of the brewery to an outside investor group that includes John Nelson, the owner of an Austin-based construction company. 

One of the things Celis sought when filing for bankruptcy was the ability to continue brewing and running the taproom. The court ruled that, for now, the brewery can use cash collateral — in this case, the money collected from customers — to keep operations going. The distributors that work with Celis to send canned and bottled beers to the Texas market will continue to do so, reserving shelf space for the brand, according to a news release sent late Tuesday.

As part of its plans for business as usual, Celis Brewery will host a two-year anniversary celebration on July 11. That also marks 27 years to the day since Pierre Celis, the father of founder Christine Celis, opened his original brewery of the same name in 1992.

The brewery increased beer production last year by 320 percent, making 11,339 barrels of beer on a system that can produce up to 50,000. Celis also was contract-brewing with a few local brands, including Uncle Billy's, Pedernales and Lake Austin Ales, filling some additional capacity on the expensive brewhouse. But according to Brewbound, the brewery misfired on a couple crucial business decisions, including overpaying on the brewing system and relying on business models it found unsustainable.

It's a mistake that Christine Celis acknowledged in the news release.

"Even though our beer has been one of the fastest growing craft (brands) in Texas, the financial model we started with put us in a cash crunch that simply did not give us any room to maneuver in a highly competitive market," she said. "We intend to fix all of that through the Chapter 11 process. It will allow us to continue to make my dad’s legendary beers and grow within more realistic parameters.”

Celis owes more than $5 million to Amplify Credit Union through a loan that uses the property on Metric Boulevard as collateral. An auction of the property would have taken place Tuesday. Because of the bankruptcy filing, that foreclosure is on hold. Celis also owes another $3 million to Amplify through a federal Small Business Administration loan.

The remainder of Celis' debt is spread among additional companies, including Ampersand Design Studio, which designed the brewery's logo and packaging, and the Ball Corporation, which supplies the aluminum cans.

Celis makes a mix of both Pierre Celis' original recipes — including the famous Celis White that converted many locals to craft beer in the 1990s — and newly invented recipes from the current brewers. Christine Celis' daughter, Daytona Camps, works on the brewing team and helped to create beers like the Juicy IPA.

The release noted that Camps will "take on an even more significant role in the brewery developing new beers and creating exciting new products as the family’s third generation brewer."