Bankrupt beer brand and brewery abruptly shuts down

• The brewery industry has faced rising costs and falling demand.

• Tariffs have increased packaging costs.

• A number of well-known beer brands have closed.

Many companies enter Chapter 11 bankruptcy with a sense of hopefulness.

Filing gives a company time to negotiate with creditors, landlords, and vendors. Sometimes it brings meaningful financial relief that allows a company to fix its finances and put a cost structure in place so the business can continue, or even thrive.

That can take a lot of forms. Sometimes a vendor will forgive certain debts or offer longer payment terms because it doesn't want to lose the customer. In other cases, vendors, landlords, and creditors may take equity in the business or even take it over.

For many companies, however, the process does not have a happy ending.

"Of the bankruptcies filed during the 2005-2016 period, approximately 53% of companies emerged (i.e., reorganization plans were confirmed), 31% of companies were liquidated or acquired, and the remaining 15% resulted in conversion, dismissal, or termination," Cornerstone shared in a research report.

Cotton House Brewery entered bankruptcy entered bankruptcy believing it would survive the process.

Cotton House Brewery will liquidate

When it filed for Chapter 11 bankruptcy protection, the owners of Cotton House Brewery shared a somewhat positive statement on Facebook.

"The partnership we hoped would flourish took a different direction, and over the past two years, we have faced significant financial strains as a result. Despite these challenges, we have remained committed to our mission, and it is this resilience that has led us to our next chapter. Today, we announce that Cotton House Craft Brewers will undergo a strategic restructuring by filing for Chapter 11 Bankruptcy. While our business model has evolved, our dedication to the community and to providing exceptional craft beer remains unwavering. We are still here, we are still beer, we are Cary!" it shared.

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That optimism did not prove to be well-founded, as the company has decided it will close its doors.

"It is with heavy hearts that we announce the upcoming closure of Cotton House. Despite our continued efforts, we have faced a long and difficult uphill battle with circumstances that ultimately proved insurmountable," the company shared. "We had hoped for more time, particularly with the holiday season approaching, but those decisions were ultimately shaped by others with financial control over the process."

Cotton House closed its taproom and sold its final beer on Nov. 17.

Cotton House Craft Brewers key facts

• Location: 307 S. Academy St., downtown Cary, NC.

• Filing: On April 8, 2025, Cotton House Craft Brewers LLC filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Eastern District of North Carolina.

• Case Info: Case number 5:25‑bk-01294, filed voluntarily.

• Court: Eastern District of North Carolina, Judge Joseph N. Callaway presiding. Source: Inforuptcy

• Reported Assets & Liabilities: Assets: between $100,001 to $1,000,000 Liabilities: between $1 million to $10 million.

• Creditor Count: 1-49 creditors listed in the filing. Source: Bankruptcy Observer

• Reason for Financial Strain: A failed expansion into a catering business via a partnership. Source: WRAL News The Triangle Beer Co. location (acquired in 2020) closed in October 2023, further compounding financial stress. Source: cary-digest.beehiiv.com

• Major Creditors (from reports): First Bank: $133,000 U.S. Small Business Administration: $400,000 North Carolina Department of Revenue: $179,000 Source: BeerAdvocate

It is unclear what will happen with the remaining assets and how the court will sell them off. No auction date has been set.

The craft beer industry has struggled

“As the craft beer landscape evolves, the industry is poised for another challenging year in 2025, with additional uncertainty, potential tariffs and rising costs, retailers and distributors looking to simplify offerings, and potential new dietary guidelines for beverage alcohol,” the Brewers' Association (BA) shared in its annual Year in Beer report.

“Market pressures will likely lead to continued consolidation and alliances to cut costs and utilize excess capacity.”

BA Vice President of Strategy Bert Watson sees a tough year ahead, but remains optimistic.

“Craft has been going through a painful period of rationalization as demand growth has slowed and retailers and distributors look to simplify their offerings or add options for flavor and variety outside of the craft category. That said, breweries have reacted to these changes by focusing on distribution, continuing to innovate in their taprooms and brewpubs, creating groups and partnerships, and offering a wider range of beverages in their portfolios,” he shared.

President Donald Trump's tariffs have also hurt beer sales and breweries, according to a report from North Carolina State's College of Natural Resources.

"Tariffs on imported steel and aluminum, the primary materials for packaging and equipment, are expected to lead to higher operating costs for craft breweries. Craft breweries might pass on those increased costs to consumers in the form of higher beer prices, potentially resulting in decreased demand and lower sales volume," the study shared.

This is the first year since it has been tracking data that the BA has found that more breweries closed than opened.

"Throughout the year, the BA has tracked 335 new brewery openings and 399 closings. Despite the slight decline in the number of breweries in operation, closings remain a low percentage of total operating breweries," it shared.

This story was originally reported by TheStreet on Nov 19, 2025, where it first appeared in the Restaurant section. Add TheStreet as a Preferred Source by clicking here.