How 'McDreamy' Plans to Resuscitate Tully's Coffee

By Jane Wells, CNBC.com

Dr. McDreamyDr. McDreamy Not every coffee company born in Seattle is a winner. Tully's, a 20-year-old chain founded in the Emerald City, filed for Chapter 11 last fall. The chain had trouble competing in the shadow of Starbucks, and it filed for protection reporting $3.7 million in debts and very little cash.

Much of its debt is owed to Green Mountain Coffee Roasters which owns Tully's wholesale and roasting businesses.

The remaining part of the company - retail stores, agreements with franchisees and the coffee sold in grocery chains - is in need of a cash infusion immediately.

Actor Patrick Dempsey is one of several parties bidding to buy Tully's out of bankruptcy at an auction Thursday.

Dempsey told the Seattle Times he'd like to save the 500 jobs at risk. "I've always loved this city, and with the purchase of Tully's Coffee, I plan to spend a lot of time in Seattle - and the stores connecting with the community and growing the Tully's brand."

Other reported bidders include Starbucks, which may be interested in taking over half of Tully's stores. Starbucks would not confirm to CNBC it was in the hunt.

And one other bidder stepping up is another Seattle-area coffee chain called Baristas Coffee Company. Baristas is called by some "The Hooters of Coffee" because its coffee servers dress suggestively.

However, it appears Baristas would like to keep the Tully's concept separate if its bid prevails.
Tully's made a deal to sell the company last fall to the private equity firm Kachi Partners for $1.5 million in cash, with Kachi also agreeing to take over $3 million in liabilities. If a bidder in Thursday's auction comes in with a better offer to Tully's owner TC Global and creditors, Tully's may have to pay Kachi a breakup fee worth potentially $200,000.

Dempsey's offer is thought to be higher than Kachi's. A lawyer representing the actor's investment group told the Seattle Times, "We're optimistic."

Update: the auction continues into Thursday afternoon, but late Wednesday, Dempsey tweeted that he was in town and posted a picture of himself with a Tully's employee: @Patrick Dempsey: In Seattle, big day tomorrow ! Hope we pull it off!

More from CNBC:
'McDreamy' Gives New Life to Coffee Chain
From Gridiron to Vineyard, Two NFL Quarterbacks Bond
Comeback Brands