BOULDER — A Denver District Court judge has ordered a third-party receiver to take control of 1908 Brands Inc. after the company’s bank alleged this month in a lawsuit that the Boulder-born, green household cleaning product maker has defaulted on millions of dollars in loans.
In the lawsuit, first reported by BusinessDen, First Western Trust Bank claims that 1908 Brands, which moved its headquarters to Aurora last year and pivoted away from its previous lines of natural foods products, took out a trio of loans in 2022 that totaled nearly $13.5 million.
The complaint said that the company has failed to make good on the conditions of the loan repayment agreement, which included collateral and guarantees from 1908 Brands founder Steve Savage and an affiliated company called Savage Properties LLC.
First Western’s complaint said that 1908 Brands’ “cash situation appears to be dire,” and a receiver is necessary to protect the bank’s collateral.
The court has appointed Patrick Donovan and his Lafayette-based Pear Partners LLC to serve as the receiver and to “collect all income generated by 1908 Brands and all rents generated” by 1908 Brand’s Walnut Street property in Boulder.
Steve Savage declined to comment on the specifics of the receivership order Friday but told BizWest that he expects “much bigger and better news in the next three to four weeks.”
The lawsuit from First Western is the latest and most monetarily significant in a series of lawsuits filed against 1908 Brands over the past couple of years, several of which have resulted in settlements.
For example, Illinois-based Marquis XT LLC claims that 1908 signed a deal for a dedicated packing line in 2020 for some of its products. Marquis claims that 1908 hasn’t paid all of its invoices on time and owes nearly $1.22 million. A trial for this case is expected to happen this spring.
1908 Brands moved its headquarters to Aurora in 2022, taking on about 50,000 square feet at 16401 E. 33rd Drive and doubling its previous Boulder footprint.
The move placed the company’s new warehouse and operations hub right next to Vision Chemical Systems Inc., a key vendor that provides chemical-blending services. Savage told BizWest at the time that the proximity of the two companies is expected to result in savings of around 5%.
The move came just a few months before 1908 Brands jettisoned the two food brands it had remaining under its control — marinade, sauce and rub line Schultz Gourmet, and pasta sauce brand Pasta Jay’s. Savage said the decision was made to allow the company to better focus its resources on its growing Boulder Clean line of household-cleaning products.
The lawsuit is First Western Bank Trust versus 1908 Brands Inc. et al, case number 2023CV30393 filed Feb. 3, 2023, in Denver District Court.