HopCat parent company sold in bankruptcy for $17.5 million

BarFly Ventures, the Michigan-based parent company of the HopCat chain of brewpubs, Stella's Lounge and the Grand Rapids Brewing Co., sold its assets this month to a pair of Texas-based investment firms.

HopCat has nine locations, including one in East Lansing. Stella's and the Grand Rapid's Brewing Co. have one location each, both in Grand Rapids.

Congruent Investment Partners and Main Street Capital secured the assets through BarFly's Chapter 11 bankruptcy for $17.5 million, forming Project BarFly.

Congruent and Main Street had been lenders to BarFly, beginning in 2015.

The company entered bankruptcy proceedings in June, after the outbreak, said Ned Lidvall, CEO of Project BarFly.

Lidvall had been CEO of BarFly Ventures, prior to the purchase.

"There were some other issues that the company was dealing with, with some less than productive new locations and some balance sheet problems, but certainly COVID is what pushed it over the edge," he said.

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"We think it's turned out well and we've saved 11 good businesses and about 500 jobs," Lidvall said.

“We know the business extremely well from our experiences over the last five years," Travis Baldwin, founder of Congruent, said in a news release. "We strongly believe in each restaurant concept and intend to return the company’s focus to providing a unique, best-in-class customer experience."

“Our goal is to focus efforts around the company’s key markets and ensure HopCat, Stella’s and Grand Rapids Brewing Company remain a thriving part of these communities," he said.

Multiple HopCat locations, including the one in East Lansing, have experienced closures related to COVID-19 after employees reportedly tested positive for the virus.

In one instance, an employee of the Kalamazoo HopCat location was fired after reportedly lying to the employer about attending Harper's restaurant in East Lansing, which was the epicenter of a massive outbreak in June.

“Over the last several months, the home office support team, general managers, and restaurant team members have worked hard to reopen the restaurants and stabilize the company," said Lidvall. "The company has continued to improve operating results in a difficult environment by focusing on keeping our team and guests safe, improving our off-premise sales and reconstructing our business as the marketplace expands and allows.”

Lidvall said the management team is excited about the new ownership. "We think it’s a great fit for the company, and the energy and collaboration they bring will only enhance our recovery and growth."

According to the release, the company had expansion plans, including into additional states, through 2021; those plans were put on hold due to the pandemic.

“We intend for these restaurants to succeed and very much believe the company can return to growth as the pandemic subsides," said Nick Meserve, managing director of Main Street. "This is much-needed good news for the local community and restaurant industry as a whole.”

Contact business reporter Christian Martinez atcmartinez@lsj.com or (517) 267-1342. Follow him on Twitter at @ChristianM_CA.