This story by John Lippman first appeared in the Valley News on May 30.
WHITE RIVER JUNCTION — More than three dozen people in the Upper Valley who invested money in Piecemeal Pies are caught up in the White River Junction and Stowe restaurant’s bankruptcy, including an East Randolph investment club and Woodstock bicycle tour operator who were among 142 individuals who invested through an online investment platform.
Piecemeal LLC, the entity that operated the two restaurants, listed total liabilities of about $958,000 and total assets of about $330,000, according to a voluntary Chapter 7 petition it filed in U.S. Bankruptcy Court in Vermont on May 16.
In addition, court records show Piecemeal co-owners Justin Barrett and Josh Brown filed a separate petition for personal bankruptcy, a result of personally securing certain liabilities of the business, according to their attorney, Michael Fisher, of Hanover, New Hampshire.
Although the Covid-19 pandemic has officially been declared over, restaurants everywhere continue to struggle, hit by inflation-driven food and beverage prices and a chronic shortage of workers. In the Upper Valley, three longtime popular places to eat in addition to Pieacemeal Pies all have recently closed, following an initial wave of closings at the outset of the pandemic in 2021.
Thirty-six individuals and one organization in the Upper Valley who invested anywhere from $100 to tens of thousands of dollars have potentially lost their money, according to a list of unsecured creditors identified in the petition.
Jerry Ward, president of East Randolph-based White River Investment Club, whose $100,000 fund made up of about 23 investors to date has invested in five small Vermont startup businesses, said the group invested about $12,000 in Piecemeal Pies, on which they were to receive a return of more than $5,000, according to the bankruptcy filing.
“They had a really unique product, and they seemed to have a lot of enthusiasm and a very loyal customer base. I loved that they used, to the extent possible, local ingredients,” Ward said on Tuesday, adding he “likes supporting companies that do food but aren’t chains and support the local economy.”
The investment club, like the other individual unsecured creditors, invested through the crowdfunding site MainVest, an online platform that offers people the opportunity to invest in small businesses in exchange for a share in future revenue. The MainVest site says that Piecemeal Pies received a total of $150,100 through the platform.
Co-owner Justin Barrett did not respond to messages seeking comment.
First opened in 2016, Piecemeal Pies prepared and sold “English-inspired” meat and sweet pies and other freshly baked goods from a storefront in the Briggs Opera House building in White River Junction. The money raised through MainVest mostly went toward opening a second location in Stowe, which after several delays finally debuted last summer.
Ward, of the investment club, said he doesn’t know what happened at Piecemeal Pies to lead it to file for bankruptcy. But in any case, as an unsecured creditor, the club is not expecting to get its money back.
“Most of their investment was in labor and a lease on their buildings. It’s not going to be recoverable,” Ward said. “I’m prepared essentially for a total loss.”
Nearly $583,000 of the liabilities are secured, according to the bankruptcy filing, of which the largest is a $298,000 loan from the Small Business Administration. Other major secured creditors include Ascentium Capital, which leases business equipment ($135,000), Channel Partners Capital ($50,000), Vermont State Employees Credit Union ($43,200) and Community Capital of Vermont ($22,800).
On top of the pandemic that clobbered many restaurants, Piecemeal Pies faced unique obstacles of bad luck not of its making, including the town of Hartford’s storm drain and water line infrastructure project along South Main Street in recent summers, which hurt outdoor sidewalk dining that restaurants were counting on to make up for indoor dining restrictions.
Then last summer, a “catastrophic failure” of the sprinkler system in the Gates Briggs Building flooded the basement and shut down businesses during the height of the summer tourist season.
Piecemeal Pies reported gross revenue of about $508,000 in 2021, the second year of the pandemic, which jumped to nearly $856,000 in 2022 — the year the second store opened in Stowe — and about $267,000 during the first five months of 2023, according to bankruptcy filings.
The filings do not report the businesses’ profit or loss but do show that Barrett drew total compensation of $44,200 in the 12 months preceding the filing and that the co-owner drew $18,300 in income.
But a 2021 “offering memorandum to raise $50,000 via MainVest — later increased to $125,000 and eventually topping out at $150,100 — presented a five-year financial forecast that projected companywide gross sales of $1.4 million and operating income of $435,000 in year one to gross sales of $2.5 million and operating income of $929,000 in year five.
The biggest unsecured creditor, Scott Cone, said he invested $25,000 via MainVest, on which he was to receive a total payout of $36,500, according to the filing.
Cone, who operates Discovery Bicycle Tours in Woodstock, said he was impressed by Piecemeal Pies’ unique product and the opening of a second store in the tourist destination of Stowe.
The brief investment, however, paid out a total of $965.79, issued in two payments during the third and fourth quarter of 2022, before he lost the remaining $24,000 from his initial buy-in.
“It looked like a very good investment,” Cone said on Tuesday, “But then you just don’t know.”