Brewery & Eatery Owners' Chapter 7: Business Impact

Understanding Corporate Financial Reorganization

When a business faces severe financial distress, bankruptcy proceedings offer a structured legal framework to address overwhelming debt. These processes are designed either to provide a pathway for the company's survival through reorganization or, if necessary, to liquidate assets to repay creditors. In the United States, two common forms of bankruptcy for businesses are Chapter 11 and Chapter 7, each serving distinct purposes under the United States Bankruptcy Code.

Chapter 11 bankruptcy is typically referred to as "reorganization bankruptcy." Under this chapter, the debtor usually remains "in possession," continuing to operate its business. The company, with court approval, can borrow new money and proposes a plan of reorganization to its creditors. Creditors whose rights are affected vote on this plan, and if it secures the necessary votes and meets specific legal requirements, the court may confirm it. The primary objective here is to keep the business operational, preserving jobs, and offering creditors a chance to recoup their investments over time, rather than through immediate, often less favorable, liquidation.

The Critical Distinction: Chapter 11 vs. Chapter 7

In contrast, Chapter 7 bankruptcy, or "liquidation bankruptcy," involves the appointed trustee gathering and selling the debtor's non-exempt assets, with the proceeds distributed among creditors. While individuals can file Chapter 7, it's generally not used for ongoing businesses seeking to continue operations. For businesses, Chapter 7 means the cessation of operations and the sale of assets. The situation becomes considerably more intricate when individuals who hold significant ownership stakes in an operating company file for personal Chapter 7 bankruptcy, as their personal assets, including their business equity, become subject to liquidation, directly impacting the health and future of the associated business entities.

Bosque Brewing Company's Initial Chapter 11 Filing

The popular craft brewery and pizza chain, Bosque Brewing Company LLC, based in Albuquerque, New Mexico, initiated its own Chapter 11 bankruptcy proceedings on October 6, 2025. This strategic move was undertaken to reorganize its financial structure after a period of expansion, including plans to expand locations in 2024 and bring brewing operations back in-house by September 2025. Filed in the U.S. Bankruptcy Court for the District of New Mexico, Bosque's petition disclosed substantial financial discrepancies, reporting assets ranging from $1 million to $10 million against significantly higher liabilities estimated between $10 million and $50 million.

Following its Chapter 11 filing, Bosque Brewing Company, alongside its sister brunch chain Smothered (which was not included in the corporate Chapter 11 petition), maintained normal business operations. This continuation of service aimed to signal stability to customers and employees while the company navigated its restructuring efforts, including a production and distribution agreement with Marble Brewery for its flagship beers, allowing Bosque to focus on taproom management.

Personal Bankruptcy Filings Complicate Corporate Reorganization

The financial landscape for Bosque Brewing and Smothered took a more complex turn with subsequent personal Chapter 7 bankruptcy filings by key co-owners. These individual bankruptcies introduced a new layer of uncertainty, as the personal assets of the owners, including their stakes in the businesses, became subject to liquidation.

Gabriel Jensen and Spouse's Chapter 7 Filing

On November 12, 2025, Gabriel Jensen, a co-owner with a combined 22.23% stake in Bosque Brewing Co. LLC and 22.25% in Smothered, along with his spouse, filed for Chapter 7 bankruptcy. This filing, reviewed by Albuquerque Business First, painted a stark picture of their personal financial distress. The Jensens reported personal assets between $1 million and $10 million, juxtaposed against a staggering $10 million to $50 million in debt. Critically, Jensen's filing explicitly stated that Bosque Brewing was "in active Chapter 11 bankruptcy" and that its "debts exceed present value of business." For Smothered, the filing declared the business as "insolvent" with "debts exceed value of assets." Their listed debts included nearly $2 million in business debt with a personal guarantee to Live Oak Bank, over $172,000 to On Deck Capital, and close to $227,000 to PAC Western Financial, among other amounts.

Jotham Michnovicz's Chapter 7 Filing

Further exacerbating the situation, Jotham Michnovicz, another significant stakeholder with a 22.35% ownership in Bosque Brewing LLC and ownership in Smothered LLC, filed for Chapter 7 bankruptcy on November 18, 2025. Michnovicz's filing estimated personal assets between $500,000 and $1 million, yet faced liabilities ranging from $10 million to $40 million. His detailed declaration for Bosque Brewing listed assets at $2.64 million with a considerably higher $17.1 million in liabilities, reinforcing the severe financial challenges confronting the brewery.

Implications for Bosque, Smothered, and Restoration Pizza

The confluence of Bosque Brewing's Chapter 11 corporate reorganization and the subsequent personal Chapter 7 bankruptcies of major co-owners presents a unique and challenging scenario. While Bosque's corporate filing aimed to restructure and continue operations, the personal liquidation of significant ownership stakes can severely complicate, if not undermine, these efforts. The assets tied to these individual filings, including the equity in Bosque and Smothered, become subject to a trustee's management and potential sale, potentially altering the ownership structure or even forcing a more widespread liquidation of the businesses themselves.

Despite these profound financial and legal challenges, all three entities – Bosque Brewing, Smothered (the brunch chain), and Restoration Pizza (a pizza concept operating within Bosque's locations under a separate LLC and not named in Bosque’s Chapter 11 filing) – have continued to remain open to the public. The continued operation highlights the complex interplay of legal proceedings, operational management, and stakeholder interests in navigating severe financial distress. The future trajectory of these popular New Mexico establishments will largely depend on the bankruptcy court's rulings, the actions of the appointed trustees, and the ability of remaining stakeholders to forge a viable path forward amidst these multifaceted financial hurdles.