A specialty tea producer in Ulster County has filed for bankruptcy protection citing struggles to overcome market disruptions caused by the Covid-19 pandemic.
Caraway Tea Company, of Highland, declared $614,660 in assets and nearly $2.7 million in liabilities, in Chapter 11 reorganization papers filed on June 9 in U.S. Bankruptcy Court in White Plains.
The business was formed in 2010 and is owned and operated by Gina Caraway, the chief executive officer, and Michael Caraway, the chief operations officer.
Caraway sources premium teas and botanicals from around the world and packages them for private label retailers and wholesalers, according to an affidavit submitted by Michael Caraway.
The company is certified to market teas as dietary supplements, and many of its products are formulated to support health goals such as energy, digestion, sleep and immunity.
The company is projecting about $3 million in revenue this year. It is working on contracts worth $841,998 and negotiating more jobs worth about $700,000, with an average profit margin of 11% before taxes.
But Michael Caraway said the company is still trying to overcome market disruptions caused by the pandemic. Initially, in 2021, demand surged as customers stockpiled products to hedge against global supply chain disruptions. But in 2022 and 2023, as customers relied on inventories, sales declined drastically.
The company borrowed money in mid-2022 to stabilize operations, he said. But as revenue continued to drop, Caraway Tea fell behind on its obligations.
By the end of 2023, revenue had been cut in half. Sales rebounded last year, he said, but not enough to fully recover from prior deficits.
Caraway Tea is renting its place of business on a month-to-month basis, Michael Caraway said, and it is facing an eviction proceeding.
Nonetheless, he said the company is “focused on long-term financial health and sustainable growth.”
