A private equity firm saved beloved Portland restaurants from bankruptcy. Then it stopped paying its bills

On Christmas Eve 2023, the co-founder of Portland’s See See Motor Coffee Co. got a frantic call from the coffee shop’s manager. The ice maker and dishwasher were being repossessed because the cafe’s owners, Sortis Holdings, hadn’t paid the lease on the appliances in months. The cafe would have to close.

“I couldn’t do that to my staff during the holidays,” said Thor Drake, See See’s co-founder. So he called up Rose’s Equipment and Supply and put the thousands of dollars due on his personal credit card. He assumed he’d get reimbursed for the essential business expense by Sortis Holdings. He never did.

Five months later, he was fired from his position as a creative director at Sortis Holdings, the company that bought See See from him in 2020. See See Motor Coffee Co. was locked out from its flagship Sandy Boulevard cafe in May for unpaid rent.

Drake watched a company he had built fall apart under Sortis Holdings’ ownership.

“This is people’s livelihoods,” he said. “It was 15 years of everything I could do to keep it going.”

Sortis to the rescue

Sortis Holdings might not ring a bell to many Oregonians, but these names probably do: Ava Gene’s, Water Avenue Coffee, Sizzle Pie.

If you’ve enjoyed a California roll at Bamboo Sushi or a haircut from Rudy’s Barbershop, chances are you’ve interacted with one of Sortis Holdings’ dozens of businesses. Sortis, which recently rebranded as SoHi Brands, currently has an estimated 1,200 employees whose livelihoods may be in peril as the company has stopped paying its bills and faces a growing number of evictions and lawsuits.

Sortis Holdings is a private equity fund, started in 1995, that began investing in well-known but struggling Pacific Northwest hospitality and retail businesses during the COVID-19 pandemic. Prior to the pandemic, Sortis had been primarily invested in real estate, but in 2020 it was approached by Wade Weigel, co-founder of Rudy’s Barbershop, to help buy the company out of bankruptcy. After that, Sortis went on a buying spree.

It acquired Submarine Hospitality, which included Ava Gene’s, Tusk, the Woodsman Tavern and Cicoria Pizza. Sortis provided a loan to Blue Star Donuts, which was at the time pivoting from a retail model to a wholesale setup, in exchange for a one-third stake in the company. It also bought Sustainable Restaurant Group, which includes the restaurants Quickfish and Bamboo Sushi. And Sortis started a coffee subsidiary, Coffee Business, which contained new purchases Water Avenue Coffee, See See Motor Co., Seattle-based coffee chain Mr. West, and a new venture, a barista training platform.

Almost all of these businesses were at crisis points when Sortis came into the picture, with many in bankruptcy procedures. According to its 2021 prospectus to potential investors, Sortis’ goal was to “capitalize on the dislocation and market stress caused by the COVID-19 pandemic.” The chairman of Sortis, Portlander Paul Brenneke, told Portland Monthly that Sortis was a “white knight.” Sortis Holdings and Brenneke declined to talk to OPB for this story.

Many of the acquisitions were done primarily in stock — founders would be paid a salary to continue their work inside of Sortis’ corporate headquarters and got shares of the company, which is traded on the unlisted stock market (the over-the-counter market, also called “penny stocks”). Sortis brought on experienced executives to work alongside the founders to grow their brands. Brenneke told Oregon Business magazine in 2020 that he wanted to scale profits in these “interesting and experiential” businesses. See See Motor Coffee Co., the hip motorcycle-themed coffee shop on Northeast Sandy Boulevard in Portland, was acquired by Sortis in summer 2020. See See co-founder Thor Drake remembers thinking, “Man, there’s such a wealth of good founders — how can this lose?”

The nationwide expansion plans for Sortis brands were aggressive. Sortis was slated to open 25 new cafes in six months, according to Coffee Business employees. Between May and December of 2021, Bamboo Sushi expanded from 150 to 500 employees with locations in Portland, Beaverton, Seattle, Denver and the Bay Area.

Tyler Zaiss, who headed up the coffee roastery side of the business, said that the promise of helping small coffee shops scale up and enter the wholesale market was exciting.

“It felt really cool to potentially help a lot of small businesses grow,” said Zaiss, who added he was promised a new 20,000-square-foot roasting facility. “In the beginning, it seemed like we had an endless amount of money.”

From investment company to hospitality juggernaut

As Sortis began to buy more and more Northwest businesses, that “endless amount of money” seemed to spread thin, and problems started cropping up. It turned out that the new facility Zaiss was promised wasn’t properly zoned for roasting, and Sortis never moved in. In October 2023, the owner of the building, Hancock Portland LLC, sued Sortis Holdings for not paying rent.

The back office of Sortis Holdings was disorganized and confusing, according to Thor Drake. The Sortis financial systems, possibly sufficient for the boutique private equity fund it was in 2019, did not seem equipped to process the high volume of invoices from the dozens of hospitality businesses it acquired.

“It felt as if they had no clue what they were doing,” Zaiss said.

He said Sortis almost immediately let go of Water Avenue’s bookkeeper and that accounts receivable were frozen for about six months.

“So, there was no income from our wholesale,” Zaiss said. “And they didn’t understand why, if you’re not receiving checks, you can’t run a business.”

A 2022 lawsuit by Thomas Bailiff, a Sortis investor in Rudy’s, detailed years of attempts to get financial statements from Sortis Holdings that would account for how it spent the $4.5 million of federal pandemic relief loans Rudy’s received. He alleged Sortis’ required filings were so late they caused him to miss tax deadlines. Bailiff died in May 2023, months after reaching a $2.8 million settlement with Sortis Holdings.

By summer of 2022, local food suppliers — many of them small businesses with few employees — said payments from Sortis-owned restaurants started arriving later or not at all. Landlords for various locations began filing lawsuits for unpaid rent, including at the newly opened Sizzle Pie and Rudy’s in Beaverton. Drake was frustrated because the See See cafes were doing a steady business, but vendors weren’t getting paid. A former director at Sortis, who spoke on condition of anonymity, said that weekly accounts payable meetings turned into a battlefield, with directors fighting over which overdue invoices they would prioritize paying.

Lawsuits against Sortis for unpaid bills and rent have been filed at a steady drip over the past two years. A July 2024 lawsuit alleges Sortis “absconded” with $515,000 of kitchen equipment in the now-shuttered location of the Woodsman Tavern and subsequently Los Burros Supremos.

“I had to start reaching out to them multiple times a week for payment,” said one local food supplier, who spoke on the condition of anonymity because their business still works with Sortis restaurants. “Sometimes it would be $10,000+ and I would finally have to pause deliveries to get them to pay.”

Meanwhile, there would be “little to no communication from Sortis,” said the vendor. The company would “blatantly ignore me for weeks, and then all of a sudden the person I talked to for payment would no longer be working there.”

The turnover in the financial staff was a problem for employees within Sortis as well: “Every three months, there would either be an addition of eight people or removal of five,” said Zaiss. “There was so much turnover that we couldn’t keep track of who to email about paying our bills.”

Working for a Sortis-owned brand

The new Rudy’s Barbershop location in Beaverton was shuttered for not paying rent just six months after opening, and stylists were given only four days’ notice. The employees at the Phoenix, Arizona, location of Rudy’s Barbershop didn’t know that Sortis was behind on rent at all until staff “showed up after a holiday weekend and their door was locked,” said Alycen Moussette, regional director of education for the company.

“I have a stylist who has now been through one, two, three Rudy’s closures,” said Moussette. “And now she’s at Northwest 21st, the shop that is in risk of the next closure in Portland because they’re not paying the rent.”

Moussette has worked at Rudy’s for two decades, starting when she was a teenager. She said it started to decay from the inside out since Sortis Holdings took over four years ago.

According to Moussette, managers at all 27 Rudy’s locations faced increasing questions from stylists: “Why don’t we have product? Why don’t we have towels? Why don’t we have this?”

Rudy’s staff earn commissions on hair products they sell. Without product, some staff saw their paychecks shrink by up to $1,000 a month. Public records show staff filed a wage complaint with the Oregon Bureau of Labor Industries in February. It remains under investigation.

Managers at Rudy’s locations now pay for basic salon supplies like shampoo using a company credit card since their vendor accounts were discontinued.

“Every time I’ve tried to use [my company card], it was declined. This was before I knew anything was going on,” said Moussette.

Zaiss said Coffee Business faced similar issues.

“There were many times where you would have to call someone at Sortis to use one of their personal cards to pay for [supplies],” he said. “Whether it was printer ink or coffee bags or moving roasted coffee to our co-packer in Seattle to make cold brew.”

Managers were then left with the choice to either delay purchases needed for their departments, or to put them on personal cards and hope they would get reimbursed.

Staff at several Rudy’s Portland locations wrote a letter on May 31 demanding Sortis give them some information and staged a one-day “sick out.” The letter cited “decreased morale” among staff due to “receiving eviction notices during work hours” and “lost wages due to the lack of necessary supplies to perform their jobs.”

“All we’re asking for is you to tell us what’s going on. We don’t want any more surprises,” said Moussette. “We put it on their front door, we took the day off, everybody took the day off.”

Moussette said Sortis executives never responded to employees’ requests for information. When OPB followed up on the letter, Sortis Holdings did not respond.

In February of this year, employees at some of Bamboo Sushi’s nine restaurants walked out after their paychecks were delayed. Sortis Holdings cited a “technical error” in processing payroll on time and said that only Bamboo Sushi workers’ paychecks were affected. But workers at other Sortis Holdings companies, including Rudy’s Barbershop, have shared emails from Sortis saying their paychecks may be late.

Moving on

Several of the founders of companies bought by Sortis Holdings have since departed the company that once promised to help them scale their beloved businesses — they were fired, laid off or forced out. The founder of Bamboo Sushi, Michelle Andersen, settled a case against Sortis over the financial terms of her layoff earlier this year. Andersen’s lawyers refiled the case last week, claiming that Sortis has not paid the $95,000 settlement terms on which the sides agreed.

David Petersen, the co-founder of Rudy’s Barbershop, who bought the brand back from bankruptcy with Sortis Holdings in 2020, was fired from Sortis last April and moved to Yucatán, Mexico, to live off his Social Security payments. He said he’s unable to cash out what remains of the multimillion-dollar business he started 31 years ago. The shares in Sortis Holdings Inc. that he and other business founders were paid in exchange for their companies are currently worth $0.0002 each.

Petersen is still in touch with many Rudy’s employees. He said he wishes that Sortis would figure out how to save the businesses it bought: “You’ve made a promise to all of these people.”

Tyler Zaiss left Sortis for a new company in June. Zaiss said he left his job because he couldn’t get the supplies he needed to run the roastery, like green coffee and packaging. But he said he hopes that things improve.

“I think it’s really sad to see the owners, the founders, of the companies be led astray,” he said. “Just watching it crumble in front of them … the companies that they built fall apart is devastating.”

Alycen Moussette is leaving her post to start her own salon with another Rudy’s stylist. Her last day at Rudy’s, Sept. 10, will also be her 20th anniversary at the company.

“I’m going out with a bang,” she said.

Thor Drake is back to operating the cafe on Sandy Boulevard without Sortis Holdings involved. Now, it’s named One Moto cafe after a motorcycle show he also runs.

“I’m not the kind of guy who gives up,” said Drake.

He rehired his cafe manager, and most of the staff returned. They hosted a grand reopening in July. The account at Rose’s Equipment and Supply just stayed on his credit card. He’s optimistic about the future and ready to “make things fun again.”

“It’s great. It feels good. The energy is back, I cleaned the whole place.”

Correction: A previous version of this story and an illustration accompanying it incorrectly described SoHi Brands’ current relationship with the Woodlark Hotel. The hotel is owned by NBP Capital. OPB regrets the error.