Red Bay Coffee Roasters has officially filed for Chapter 11 bankruptcy. The Black-owned coffee chain in Oakland will begin this process as multiple lawsuits against the company wage on.
San Francisco Business Times reported that Red Bay filed in late August. The notable franchise, which boasts five stores across the Bay Area, stated that COVID-19’s impact and the ongoing lawsuits played the biggest roles. Specifically, the paperwork noted “spiraling costs and related uncertainties” surrounding the lawsuits as a push toward Chapter 11 protections.
The owner and current debtor-in-possession, Keba Konte, founded Red Bay in his garage in 2014. In his declaration for first-day motions filed on Sept. 5, Konte released his asset valuation at $251,000. He also listed his liabilities at $3.3 million, with two loans valued at $550,000 each. On the other hand, the company had a net loss of more than $850,000 in a six-month period starting January 2024.
Through its expansion, Konte appointed the space as unapologetically welcoming to Black and Brown people, hosting panels and workshops to uplift its local community. Red Bay has also featured exclusive coffee blends that shed light on social causes, one most recently dedicated to the conflict in the Democratic Republic of Congo conflict as well as sickle cell disease awareness. However, lawsuits accusing employees of sexual harassment and wage theft have stunted the company.
In 2018, a former employee sued Red Bay, alleging that several coworkers engaged in sexual harassment against them. The employee further claims that they were demoted and then fired for retaliation. Moreover, they accused the business of not paying the full wages owed.
A former landlord also filed another lawsuit against Red Bay. The filing stated the franchise breached a contract surrounding one of its now-defunct locations in Southern California. To add to its legal woes, the filing also claimed the Equal Employment Opportunity Commission (EEOC) launched an investigation into its business practices based on claims made by a former employee. The EEOC has yet to confirm the investigation, given federal policies.
As the Oakland-based chain enters bankruptcy, the future of its five operating storefronts remains in limbo.
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Source: finance.yahoo.com