Red Bay Coffee Roasters has officially filed for Chapter 11 bankruptcy. The Oakland-based black coffee chain will begin the process amid multiple lawsuits against the company.
San Francisco Business Times reported that Red Bay filed in late August. The notable franchise, which has five stores in the Bay Area, said the impact of Covid-19 and ongoing litigation played the biggest role. The paperwork specifically cited “rising costs and related uncertainties” surrounding the lawsuits as a push toward Chapter 11 protection.
Owner and current debtor in possession, Keba Konte, founded Red Bay in his garage in 2014. In his declaration for first-day motions filed on September 5, Konte listed his asset valuation as $251,000. He also listed his liabilities at $3.3 million, with two loans worth $550,000 each. On the other hand, the company had a net loss of more than $850,000 in the six-month period beginning in January 2024.
With the expansion, Konte has rebranded the space as one that is unapologetically welcoming to Black and Brown people, hosting panels and workshops to uplift the local community. Red Bay has also introduced exclusive coffee blends that shine a light on social causes, including one recently dedicated to the conflict in the Democratic Republic of Congo and sickle cell disease awareness. However, lawsuits accusing employees of sexual harassment and wage fraud have dogged the company.
In 2018, a former employee sued Red Bay, alleging that multiple coworkers had sexually harassed them. The employee further alleges that they were demoted and then fired in retaliation. Additionally, they accused the company of not paying full wages owed to them.
A former landlord also filed another lawsuit against Red Bay. The filing alleged that the franchise breached a contract regarding one of its now-defunct Southern California locations. To add to their legal woes, the filing also alleged that the Equal Employment Opportunity Commissions (EEOC) had launched an investigation into their business practices based on claims made by a former employee. The EEOC has yet to confirm the investigation, given federal policy.
Now that the Oakland-based chain has gone bankrupt, the future of the five existing stores is uncertain.
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