Heavy Seas Beer files for bankruptcy as founder prepares to retire

Baltimore’s craft brewing pioneer Heavy Seas Beer has filed for Chapter 11 bankruptcy protection as its founder, Hugh Sisson, prepares to retire.

Over the past few years, Heavy Seas, formally named Clipper City Brewing Company, “has faced increasing financial pressure, in part due to the impact from the general decrease in the consumption of craft beer throughout the country, as well as Hugh Sisson’s decision to retire after operating the Debtor for over 30 years,” according to documents filed in U.S. Bankruptcy Court for the District of Maryland this week.

But the Halethorpe brewery isn’t going anywhere, at least for now. The company’s bankruptcy attorney, Paul Sweeney at YVS Law in Annapolis, said the move is meant to clear the way for a potential sale or merger with another local brewery.

“There’s a number of suitors that we’ve been talking to,” said Sweeney, who declined to name the potential future partners, citing confidentiality.

The company came close to a sale last year, announcing it was being acquired by B3 Beverage Co. through a strategic partnership, but the deal did not go through, Sweeney said.

At 72, Sisson is now preparing to retire, though Sweeney said the timeline could be around five years. For more than three decades in the business, Sisson has played a major role in starting the local brewing industry, Sweeney said.

“Hugh Sisson started the craft brewing industry and worked on legislation to make it a thing in Maryland,” he said.

Sisson could not be reached immediately for comment, but his daughter, Caroline Sisson, director of marketing for Heavy Seas, said the founder remains committed to keeping the brewery afloat — and in Maryland. In an Instagram post Tuesday, Heavy Seas announced Hugh Sisson’s retirement and shared that it was “taking steps to reorganize the business with the goal of protecting the brand and the jobs it supports.”

Under Chapter 11, a company can reorganize its debt through negotiations with its creditors under the auspices of the bankruptcy court. Sometimes creditors agree to accept an ownership stake in exchange for debt or to restructure the loans or take less for them. Chapter 11 presumes a company has a better chance of paying its creditors by remaining in business.

Court documents show that Clipper City has more than $4.3 million in liabilities, with a long-term loan of more than $2.3 million owed to Wells Fargo.

Chapter 11 would address and ultimately discharge all those debts, Sweeney said.

“It buys us time,” Caroline Sisson said. “It gives us a little bit of leeway so our brand can stay on the marketplace while we develop our plans.”

She hopes to see a merger in Heavy Seas’ future, a strategy that many other breweries have taken to shore up their financial foundations.

The company reported more than $5 million in revenue through Nov. 7 of this year, with most of that coming from wholesale purchases. But Caroline Sisson said that’s still down from pre-COVID levels, and not enough to keep up with across-the-board rising operating costs including Baltimore Gas and Electric bills and labor.

“It’s really hard in the industry right now,” she said. And the brewery is not always able to raise its prices to keep pace with its increased costs. “We can’t hike up our prices too much,” she added. “The consumer might not buy our beer.”

It’s just the latest temblor for Maryland’s once growing brewing scene. Columbia’s Black Flag Brewing Co. announced it may close if an upcoming sale doesn’t go through. And earlier this month, Guinness shuttered its Open Gate Brewery, near Heavy Seas.

“Put it out there that everyone must drink more beer,” Sweeney said.