The economic upheaval created by the COVID-19 crisis will put one of Capitol Hill’s signature companies back in the hands of the group of friends who created it on E Pine nearly 30 years ago.
According to federal court filings in a $3.5 million deal that closed Friday, Rudy’s Reloaded, a company involving founders Wade Weigel and David Petersen has successfully won a bid to purchase the Rudy’s Barbershop chain out of bankruptcy.
“After several rounds of bidding between the Stalking Horse and Rudy’s Reloaded during the Auction, the Debtors determined, in consultation with counsel to the Committee, that: (i) Rudy’s Reloaded was the Successful Bidder and its final bid was the Successful Bid; and (ii) that the Stalking Horse was the Back-Up Bidder and its final bid was the Back-Up Bid under the Bidding Procedures Order,” an analysis used in determining the winning bid reads.
In early April, CHS reported on bankruptcy proceedings for the chain of 25 barbershops as COVID-19 restrictions battered the company taken over in 2014 as New York-based venture capital and buyout specialist Northwood Ventures became a majority investor. The financial implosion seemed like an early harbinger of the likely tough times ahead for Hill businesses as the company sought the court’s permission for a quick sale to raise the cash it needed to continue and save some 600 jobs across Washington and the country. “Because the company was forced to shutter all of its operations, the company’s main source of revenue, the services it provides to its customers, has completely and unexpectedly evaporated overnight,” CEO Kathleen Trent wrote in the Chapter 11 bankruptcy documents.
Under the proposed terms, Rudy’s and “stalking horse” bidder Tacit Capital had 30 days to work out a deal.
But the Delaware federal bankruptcy court filings reveal a nimble and well-struck effort from a Seattle company representing Rudy’s founders Weigel and Petersen, plus Seattle restaurateur Tom Bailiff, and Portland investor William “Butch” Bannon was able to shape a deal to win the day and outbid the stalking horse pre-bankruptcy agreement for the takeover.
According to court documents, the key to the winning bid was the partnership’s willingness to take on leases at all 25 existing Rudy’s locations including two on Capitol Hill — one on 15th Ave E, and the original Rudy’s and its headquarters on E Pine.
The first Rudy’s was opened in January, 1993 on E Pine by friends Alex Calderwood, Weigel, and Petersen. You can trace the lineage of many veins of Capitol Hill cool through the partners. Weigel, for example, also was part of starting the Cha Cha Lounge. The trio also made a fortune with their Ace Hotels.
According to company lore, the trio was looking to make a place where they could hang out with their friends when they opened Rudy’s on Capitol Hill. Rudy’s first East Coast location opened in New York in 2012. There have also been locations in Portland, Nashville and Atlanta. All 25 of its stores are company-owned and its 600 employees are full-time with health benefits, the company told CHS in 2018 on its 25th anniversary.
Calderwood died in 2013 but the partner’s presence played a major part in the deal. In early May, his estate joined the Rudy’s Reloaded partners in objecting to the sale of the chain to the private equity firm. Days later, private equity Tacit Capital was doubly outpaced as Reloaded made its bid and secured the deal.
What comes next for the chain is now being worked out. CHS spoke with one member of the Rudy’s Reloaded company about the deal but the partner declined to comment at this time. All 25 locations of Rudy’s and their leases are part of the acquisition. Under Washington’s phased plan for reopening, barbershops are set to be eligible to again offer services when “Phase 2” begins, hopefully, sometime in June..
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