Too much coffee can make anybody a little giddy.
Patrick Dempsey, best known as Dr. Derek “McDreamy” Shepherd on medical drama "Grey's Anatomy," sent out a celebratory Tweet late last night after his investment group made the highest single bid for Tully’s Coffee in a Seattle bankruptcy auction. “We met the green monster, looked her in the eye, and...SHE BLINKED! We got it! Thank you Seattle!” he wrote.
The “green monster” is Starbucks, and either it or the bankruptcy judge who still has to approve the deal at a hearing next week could throw a wrench into Dempsey’s white knighthood.
The investment group of which Dempsey is a member, Global Baristas LLC, beat out the other six bidders, including the coffee giant, with an offer of $9.15 million for the 47-store chain. In a statement, Scott Pearson, CEO and president of Tully’s parent company TC Global, Inc., called the auction outcome “a big win for Seattle.”
Tully’s, which filed for bankruptcy in October and closed 19 stores, has more than 500 employees. Dempsey said preserving those jobs was a top priority. “I’m thrilled that we won and I’m even more excited about saving Tully’s Coffee and its hundreds of jobs,” he said in a statement. “I am honored to have the privilege to own Tully’s.”
But his grand plans and talk of ownership are a little premature. “On its face, Dempsey won because he outbid everybody else, but they haven’t won yet,” said Anthony Michael Sabino, a bankruptcy attorney who specializes in corporate restructuring.
Global Baristas still has to get through a hearing on Jan. 11 and have a bankruptcy judge verify that its bid is the highest and best. “The reasonable expectation is very high that the Dempsey group will be the new owner of Tully’s, but it’s not an absolute certainty yet,” Sabino said.
One roadblock could be Starbucks. “We’ve made an offer for 25 locations and another bidder made an offer for all of the remaining assets and the combined amount of our bids is $10.56 million,” said spokesman Zack Hutson, who added that even though the auction is over, the judge hasn’t made her decision yet.
With a bid nearly $1.5 million higher than Global Baristas, Starbucks or the unnamed second bidder could challenge the results of the auction in next week's hearing. "We're evaluating our options," Hutson said.
Sabino said price isn’t everything in bankruptcy sales, though. “The quality of the bid can sometimes overcome higher [ ones],” Sabino said. The bankruptcy court has to weigh a variety of factors besides the dollar amount, such as how much of an offer is cash or assumption of debt versus equity, how quickly the deal is likely to close, whether or not there is likely to be any regulatory review that could delay the sale and which buyer’s plan for the company’s future will benefit stakeholders the most.
A Global Baristas spokesperson said via email it was confident it would prevail at the hearing “because of the loss of jobs and breakup of company if others were chosen.”
Hutson countered by saying Starbucks also would keep jobs. “If our bid is accepted along with the companion bid, we intend to invite Tully’s employees at the locations we acquire to apply for positions with us,” he said, adding that current Tully’s employees would get preference as long as they met Starbucks’ job requirements.
Despite his onscreen ability to resuscitate the ailing, Dempsey doesn’t have a background in corporate turnarounds, and he began making plans to buy Tully’s only about a week before Christmas. He seemed eager to get involved, sending out Tweets throughout the day on Friday chronicling his visits to different Tully’s shops. “Heading to Clyde Hill Tully's now to meet employees and our customers. Very exciting,” he wrote.
“I will be making Seattle my home away from home and spending a significant amount of time in the community,” he pledged.