Canned cocktail maker in financial distress, facing forced bankruptcy
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For its first few years in Indianapolis, Blue Marble Productions Inc. was in major growth mode—but now the manufacturer of canned cocktails is facing major financial problems and is fighting for its very survival.
Blue Marble’s co-founder and CEO, Alan Miller, said the company is about $22 million in debt and has hired legal counsel to figure out the best path forward, which could include anything from finding the money to repay the debts to reorganizing through a Chapter 11 bankruptcy, finding a buyer or even shutting down altogether.
“Everything’s on the table,” Miller told IBJ last week.
Contacted again by IBJ on Monday, Miller said the company plans to pay off its creditors soon.
Late last month, some of Blue Marble’s creditors took legal action in an attempt to force the company into Chapter 7, or liquidation, bankruptcy. Several other creditors have filed separate lawsuits against Blue Marble in Marion Superior Court within the past six months over allegations of unpaid bills.
The bankruptcy action was filed Feb. 23 in U.S. Bankruptcy Court in the Southern District of Indiana by three companies that claim Blue Marble owes them a combined $3.13 million.
Those three creditors include St. Cloud, Minnesota-based beverage industry consultant BevSource Inc. In early February, a district court judge in Minnesota ordered Blue Marble to pay a judgment of $1.76 million to BevSource. The two other creditors in the Indiana bankruptcy case are Chicago-based Ardagh Metal Packaging USA Corp., which says Blue Marble owes it $905,710; and The Millcraft Paper Co., an Independence, Ohio-based company that says it’s owed $469,326.
The case is an involuntary bankruptcy filing, meaning that it was initiated by Blue Marble’s creditors.
Meredith Theisen, a partner at Indianapolis law firm Rubin & Levin P.C., is representing the creditors in the bankruptcy filing. She declined to comment on the case, saying it is the firm’s policy not to talk about pending litigation.
But Indianapolis bankruptcy attorney Mark Zuckerberg, who is not involved with the Blue Marble case, said involuntary bankruptcy cases are “very rare.” Almost all bankruptcies, Zuckerberg said, are voluntary cases in which the debtor itself files for bankruptcy protection.
When creditors file an involuntary bankruptcy petition, Zuckerberg said, multiple outcomes are possible. Debtors have the right to dispute an involuntary bankruptcy petition, and if they can prove that they have a legitimate reason for not paying the disputed amount the judge can choose to dismiss the case. Or, if the debtor does not respond to the petition within 21 days, the bankruptcy case will proceed.
In the Blue Marble case, the company has until next Monday to file a response.
Miller said the involuntary bankruptcy petition came as “a total shock” because the company had been working with its creditors. After learning of the filing, Miller said Blue Marble hired legal counsel to help it review its options.
Miller said last week he hopes the company can find a way to continue operating, perhaps by determining a way to pay off creditors or by converting the bankruptcy to a voluntary Chapter 11 case. Chapter 11, or reorganization, bankruptcy is for companies that intend to remain in operation and repay their creditors over time. Chapter 7, or liquidation, bankruptcy involves liquidating assets to pay creditors and shutting down the company. For a Chapter 11 bankruptcy to succeed, though, Miller said, Blue Marble would have to find someone to lend it enough money to keep the company running through the process.
Another option would be to find someone to acquire Blue Marble, though Miller said the company has been trying to attract a purchaser without success.
“We’re still evaluating the best course of action with our attorneys,” Miller said. “We’re so far in the hole that it’s difficult for us to find a solution.”
Miller cited several factors for Blue Marble’s problems, chief among them a multi-day cold snap in December 2022 that ended up destroying a key piece of equipment at its Georgetown Road facility.
Blue Marble uses reverse osmosis equipment to purify the water it uses in the canned drinks it produces under its own label and for outside clients. During the holiday cold snap, Miller said, that equipment was destroyed when water inside the equipment froze, causing burst pipes and flooding.
The company was insured for the loss, Miller said, but the plant was out of commission for the six months it took to locate, order and install a new reverse osmosis system.
“These water systems are not an off-the-shelf item that you can just go buy at the store,” Miller said. “We went basically six months of not producing product, yet we still had huge bills that we had to pay.”
Blue Marble still isn’t back to full production, Miller said. The company had to eliminate a production shift in mid-2023, cutting about 30 full-time jobs. The company currently has about 90 remaining employees, with another 10 or so hourly workers who work as needed during high demand periods, Miller said.
In a related setback, Miller said Blue Marble lost its largest customer, Ferdinand-based Mom Water, because with its diminished manufacturing capacity Blue Marble couldn’t supply the volume that Mom Water needed. Mom Water, whose products include flavored waters infused with vodka, had shifted its production to Blue Marble in early 2022 because it needed more capacity than its previous co-packer could provide.
A Mom Water representative confirmed that the company is no longer doing business with Blue Marble but said the company’s founders, Bryce and Jill Morrison, were unable to comment on the situation.
Miller said a few other factors, including the effects of the pandemic and inflation, have also created challenges for the company.
During its best year pre-pandemic, Miller said, Blue Marble had annual revenues of $70 million, with about 125 full-time employees and as many as 60 additional hourly employees who worked on an as-needed basis.
Last year’s revenue dropped to about $25 million, Miller said.
It’s a sharp reversal of fortunes for Blue Marble, which Miller founded in 2016 with his then-girlfriend, Danyelle Rabine. The two are now married.
Miller and Rabine started Blue Marble because they were dissatisfied with the quality of the premixed cocktails available on the market.
The company began in Oregon, where the couple worked on the drink formulas and produced their very first batch of products: a sample run of 1,000 cases, canned by a co-packer in that state.
But, Miller said, he and Rabine couldn’t find a co-packer who could use the type of cans that Blue Marble wanted for its drinks. So the company decided to do the packaging itself, relocated to Indianapolis and began production here in 2018.
Initially, Blue Marble occupied an 18,000-square-foot facility at 6008 Corporate Way in the Park 100 industrial development. By October 2020 the company had outgrown that site and moved to its current location at 7520 Georgetown Road. Initially, Blue Marble used 181,000 square feet of production space at the new location, but by 2022, it had taken over the entire 423,000-square-foot facility.
A look at the Indiana Economic Development Corp.’s transparency portal, however, shows that Blue Marble’s growth has fallen short of its expectations.
In 2020 and 2021, Blue Marble secured approval for four separate economic development incentive contracts totaling nearly $2 million. The 2020 incentives were related to the company’s relocation to Indianapolis and the 2021 incentives were related to its expansion plans.
According to the IEDC contracts, Blue Marble planned to hire 130 employees by the end of 2022 and invest $9.29 million in its Indianapolis operations. The portal shows that through the end of the 2022 reporting year, the company had met its hiring goals but had invested only $3.44 million in the operations, or a little more than a third of what it had anticipated.
The incentives are performance-based, meaning that the company can claim them only after it hires Hoosiers or makes the investments.
The transparency portal shows that Blue Marble has claimed only $395,696 of the $1.99 million in incentives it’s qualified to claim. The portal also shows that the company is in compliance with the terms of its incentives contracts.