Judge grudgingly gives Pittsburgh Brewing two more weeks

Wednesday, October 25, 2006
By Len Boselovic, Pittsburgh Post-Gazette



U.S. Bankruptcy Judge M. Bruce McCullough yesterday granted Pittsburgh
Brewing a two-week stay of execution, forcefully questioning whether
current management or anyone else can raise the capital needed to save
the 145-year-old Lawrenceville brewery.

His comments came during a hearing on $814,000 in unpaid federal excise
taxes, a debt that's grounds for closing the brewery immediately.
Company attorney Robert Lampl and attorneys for creditors pleaded with
the skeptical judge not to do that, asking that the brewery be given
until Nov. 7 to come up with financing sufficient to put the
beleaguered brewery back on its feet.

"If they can't even pay this, why don't we just shut it down?" Judge
McCullough asked at the beginning of the 45-minute hearing. "This thing
has gone on long enough and it isn't happening. When it's dead, it's
dead."

The judge also criticized a reorganization plan the brewery filed last
week, saying, "The plan you've got ain't gonna work. ... That plan
doesn't fly."

The reorganization plan calls for $500,000 in interim financing from
East Liverpool, Ohio, financier Craig Newbold and $7 million in debt
and equity from unnamed investors. Observers question whether anyone
would provide financing unless current management, including President
Joseph R. Piccirilli and minority shareholder Jack P. Cerone, is
replaced.

Rumors continue to circulate about outside investors interested in
rescuing the brewery, but thus far no one other than Mr. Piccirilli and
Mr. Cerone, the son of a convicted Chicago mob boss, has made a
proposal.

Pittsburgh Brewing sought bankruptcy protection Dec. 7 after the
Pittsburgh Water and Sewer Authority threatened to terminate service
over more than $2 million in unpaid bills.

Mr. Lampl said the brewery is scheduled to meet next week to discuss
financing with interested investors. He said several alternatives are
being considered, including what he called "Plan C," which would not
require about $1 million in concessions the brewery is seeking from 160
workers represented by the IUE/Communications Workers of America.

Although Mr. Lampl did not state it, that plan would probably result in
producing the brewery's flagship brands, Iron City and IC Light, at
another brewery, possibly the former Rolling Rock brewery in Latrobe
purchased recently by City Brewing of La Crosse, Wis.

IUE/CWA attorney Michael Healey and Robert Sable, the attorney for the
brewer's unsecured creditors, asked Judge McCullough to give the
brewery until Nov. 7 to come up with what Mr. Healey described as "a
credible plan with credible financing."

"The place does have a chance. We'll know in two or three weeks if it's
going to make it," Mr. Healey said.

Judge McCullough questioned that optimism, telling Mr. Sable, "You wear
rose-colored glasses like I've never seen." He said delaying a decision
on the fate of the brewery will just make it harder when the time
comes.

"What you're doing here is putting me closer to Christmas when I've got
to put people out [of work]," Judge McCullough said. "I just don't want
people to have expectations that this is going to work because I don't
see it."

But in the end, the judge agreed to delay a decision until Nov. 7, when
he will be asked to approve the brewery's request for $500,000 in
interim financing from Mr. Newbold. He also agreed to a compromise over
the unpaid federal excise taxes.

The order will allow the U.S. Alcohol & Tobacco Tax & Trade Bureau to
cash in $593,000 in brewery bonds that back payment of excise taxes.
The brewery also agreed to ship future tax payments and tax returns to
the brewery over night.

Once the bonds are redeemed, Pittsburgh Brewing is required by law to
purchase a new bond to back up future excise tax obligations. Mr. Lampl
said it can't afford to do that. Lawyers for the government agency said
they are unwilling to shut down the brewery if it doesn't have a bond
and left that decision to Judge McCullough.

"If you can't do a bond and you can't keep current, how do we keep you
alive?" Judge McCullough asked.