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ST. LOUIS — A local investor is set to buy Urban Chestnut Brewing Co. for $2.55 million, saving it from closing amid bankruptcy.

Federal Judge Brian C. Walsh on Wednesday agreed to approve the sale between Urban Chestnut and Ladue-based Keg Holdings.

“Given the refinancing and sale efforts, I believe the sale to Keg Holdings represents the best offer for the assets of UCBC,” Urban Chestnut President David Wolfe said in filed documents.

Urban Chestnut’s bankruptcy is part of a larger struggle for craft beer over the past several years. Fallout from the COVID-19 pandemic and changing consumer tastes and habits have led to a 2% market decline nationwide for the first half of 2024, according to the Brewers Association, which represents small and independent craft brewers.

Sales from the second half of 2024 suggest even weaker performance, the trade group found.

Locally, O’Fallon Brewery filed for bankruptcy in 2023, eventually closing and putting its equipment up for auction. Earthbound Beer on Cherokee Street in Gravois Park shuttered last year. Both Schlafly brewery’s Bankside location in St. Charles and Freestyle Brew Co. in Eureka closed in January. And Wellspent Brewing Co. in Midtown was listed for sale this month.

Urban Chestnut, which makes Zwickel, Schnickelfritz and Urban Underdog, among others, filed for bankruptcy last year, after the pandemic led to financial pressures and years of unpaid loans. The company has since worked with investment partner Brian Travers, owner of Keg Holdings, to try and alleviate Urban Chestnut of its financial woes.

Wolfe, in a declaration filed with the bankruptcy court Tuesday, said the brewery had previously discussed combining operations with Schlafly or selling to Anheuser-Busch InBev, but deals never materialized.

At an October hearing, Travers made the initial bid to purchase Urban Chestnut, just weeks after it had filed for bankruptcy protection for $2.55 million in debts.

Wolfe said in his statement that the company had conversations with several craft brewers, including North Carolina-based Artisanal Brewing Ventures, New Realm Brewing, which runs taprooms across the southeastern U.S., Jim Koch, who founded Boston Beer Co., plus a mix of breweries operating for investment companies Ulysses Capital and Greenleaf Capital Partners.

But none resulted in legitimate interest or a competing bid, he said.

Wolfe’s lawyer, Spencer Desai, told Judge Walsh on Wednesday that other third-party bidders told Urban Chestnut they were unable to top Travers’ initial offer.

“This is not a pre-baked sale,” Desai said.

Urban Chestnut was founded in 2010 by Wolfe and Florian Kuplent. It opened its first location near ӣ����Ƶ’ Midtown the following year and a second, larger space in The Grove three years later. Its third brewery, located in Germany, will not be included in the sale.

Instead, it will be liquidated and the funds from that transaction will go toward Urban Chestnut’s debts, Desai said.

Joshua Jones, with the U.S. Attorney’s Office, said the company has over $4 million of unpaid loans, including from the taxpayer-funded Small Business Administration.