The Wilkes County-based Brushy Mountain Bee Farm, one of the largest beekeeping equipment suppliers in the nation, has been closed and its employees laid off due to insolvency.
Brushy Mountain also has been placed in receivership, a court-ordered action taken when a business is unable to pay its debts and/or suspends ordinary business due to lack of funds.
Clayton, Mo.-based Enterprise Bank & Trust filed a motion in Wilkes Superior Court on Nov. 16 seeking the appointment of attorney James C. Lanik of High Point as receiver for Brushy Mountain Bee Farm. On Nov. 26, Judge Angela Puckett signed an order in Wilkes Superior Court granting the motion.
The order said Brushy Mountain is insolvent because its assets are far less than over $4.3 million it owes Enterprise in four loans.
Brushy Mountain borrowed $6.9 million in the loans from Enterprise in 2014 and made its scheduled payments until it defaulted this past Sept. 30 by missing a payment, stated a complaint filed by Enterprise with the motion for a receiver on Nov. 16.
Enterprise sent Brushy Mountain a letter on Nov. 1 saying failure to make the delinquent loan payment within five more days would result in an “event of default.” This pre-defined circumstance allows a bank to demand (“accelerate”) full repayment of an outstanding loan balance before it’s due.
The complaint said the delinquent loan payment wasn’t made within five days and Enterprise sent Brushy Mountain an “acceleration” letter on Nov. 9 saying the full unpaid loan balance was due.
The Nov. 26 order said Brushy Mountain defaulted on an unpaid balance of more than $4.3 million owed to Enterprise, with interest still accruing. It said that as a secured creditor, Enterprise is entitled to sell Brushy Mountain’s assets since they were used as collateral for the loans made in 2014.
The assets include a 30,000-square-foot manufacturing and warehouse facility with wood- and metal-working equipment for producing beekeeping equipment on Industrial Park Road in Wilkesboro. This property has an appraised county tax value of $643,100.
Brushy Mountain’s assets also include inventory and equipment in leased retail and warehouse facilities in Wilsonville, Ore., and New Columbia, Pa., as well as inventory and other equipment in Wilkes County.
The assets don’t include several buildings on 17 acres off Bethany Church Road in the Brushy Mountain community that housed the company’s business offices, local retail store, sewing operations (for producing beekeeping clothing) and certain other functions. This real property belongs to and was leased from Steve and Sandy Forrest, founders and former owners of Brushy Mountain Bee Farm.
Brushy Mountain employed about 100 people, with the majority in Wilkes, when it starting cutting jobs and closing operations over a month ago. The company employed well over 100 people a little over a year ago. The retail store off Bethany Church Road was the last portion to close.
Steve and Sandy Forrest began Brushy Mountain Bee Farm in the basement of their home in the Brushy Mountain community in 1977, a few years after moving there. Previously, both were teachers in Iredell County. They hired their first fulltime employee in 1981.
Shane Gebauer joined Brushy Mountain as general manager in August 2007, under an agreement that called for him to receive additional ownership of the company each year. Gebauer grew up on a dairy farm in northern New Jersey and met the Forrests while working for another major beekeeping equipment company.
Fueled by the increasing popularity of beekeeping, Brushy Mountain continued growing and opened a 12,000-square-foot distribution center in Pennsylvania in 2009. It was selected by “Business North Carolina” magazine as the Small Business of the Year that same year.
The company worked with the N.C. State University Industrial Extension Service and the N.C. Small Business & Technology Development Center (SBTDC) at Appalachian State University to become more efficient and improve sales.
The manufacturing facility on Industrial Park Drive opened in 2013, with the aid of a Small Business Entrepreneurial Assistance grant of $250,000 from the N.C. Department of Commerce and an N.C. Rural Economic Development Center Building Reuse and Restoration grant of $150,000.
Also in 2013, the Forrests and Gebauer were named N.C. Small Business People of the Year. Steve Forrest was CEO, Sandy Forrest was secretary/treasurer and Gebauer was chief operating officer at that point.
In September 2014, the Forrests officially retired and Gebauer became president of Brushy Mountain. Gebauer also is near the end of a year as Wilkes Chamber of Commerce board chairman.
Also in September 2014, the Forrests sold their majority interest in Brushy Mountain to Wilimette, Ill.-based Hadley Capital—or actually to Delaware-based BMBF Holdings Inc., a holding company formed by Hadley.
According to its website, Hadley is a small business private equity firm that invests in or acquires companies with $5 million–$30 million in annual revenue. Gebauer owned 30 percent of Brushy Mountain when the Forrests sold to Hadley.
Hadley’s website stated that “Gebauer… wanted to buy the business and needed a partner to help him finance the purchase. Hadley Capital provided the needed capital to purchase the business, and the partnership helped the firm expand to the West Coast by acquiring Ruhl Bee Supply. Hadley Capital also provided financing to purchase equipment to help the company scale up its production.”
Wilsonville, Ore.-based Ruhl Bee Supply became a division of Brushy Mountain when it was acquired by Hadley.
No assets of Brushy Mountain can be sold or conveyed without Lanik’s written consent or a court order, according to the order designating him the receiver.
The order details Lanik’s obligations with the assets and said he will be paid $325 per hour, plus reimbursement for out of pocket expenses. It said his pay will come from the assets.
The order said Brushy Mountain and BMBF Holdings Inc., also a defendant, were notified of Enterprise’s plans to have a receiver appointed. It said all other parties who may assert an interest in the assets were notified.
Language in court papers indicates that Enterprise has priority above other creditors of Brushy Mountain.
Lanik couldn’t be reached for comment by press time.