Local bank sues K2 Brothers Brewing in $4.7M foreclosure
Latest legal snafu comes after the Penfield brewery closed its expanded second location in Wayne County earlier this year.
Canandaigua National Bank and Trust Company has filed a foreclosure action against K2 Brothers Brewing, its affiliated real estate entities, and individual guarantors, seeking more than $4.7 million tied to loans used to fund the brewery’s Wayne County expansion, court records show.
The suit, filed September 11 in Wayne County Supreme Court, claims K2 defaulted on a first mortgage and interim loan secured by its properties in Penfield at 1221 Empire Blvd. and Walworth, Wayne County at the Freewill school project (4320 Canandaigua Road).
The bank’s complaint names multiple defendants, including K2 Brewing, Inc. (the brewery’s original intended name), 4320 Canandaigua Rd LLC, 1221 Empire Blvd LLC, and the individual guarantors Kyle R. Kennedy and Bradley J. Kennedy. Subordinate lenders and lienholders are also named, including the New York State Department of Taxation and Finance. (More details on these defendants will be offered later in the story.)
The bank’s complaint alleges that in May 2023, CNB extended two loans to K2 and its holding entities. The first mortgage loan totaled $2,050,000, while the second interim loan was for $2,040,000. According to court records, these were secured by first mortgages on both the Walworth (Freewill site) and Penfield (Empire Boulevard) properties.
Photo: The exterior of K2 Brothers Brewing on Empire Boulevard earlier this week.
Brewing roots, expansion ambitions, and closure
K2 Brothers Brewing began in December 2017 in Penfield. The brothers Kyle and Brad Kennedy opened their original taproom and brewery on Empire Boulevard opposite Irondequoit Bay, converting a former antiques store into a 10,000-square-foot craft brewery. Utilizing a 7-barrel brewhouse, the Kennedys focused on innovation in small-batch craft beers and built a loyal following. Fueled by an eager public, perfect location, and one of the best outdoor spaces in the region (seriously, that year-round K2 beer garden is so clutch), K2 quickly maxed out its production by adding custom-built fermenters.
As I wrote in May 2023:
They were ready to move forward with a new location in the city of Rochester right as the pandemic pause hit in early 2020. But they were able to take a step back and continue their search amid all the uncertainty. When their real estate broker approached them with the possibility of buying the Wayne County school, they thought, “Where else are we gonna get this much space and have this much of a blank canvas for this price?” Kyle said.
The Kennedys put plans to renovate and expand the original Empire location on the back burner while focusing on the school property. The application, filed and then approved by the town of Penfield in 2022, outlined some huge changes — an expanded kitchen, the addition of second-floor event space, and expansion on the north side of the property to include a covered, second-floor deck/dining space and an enclosed patio below.
K2 owners also purchased the neighboring Agway garden center at 1225 Empire Blvd. in the middle of 2023 and got plans approved by Penfield officials to use the “existing building to support the existing brewing and restaurant uses” and then provide “ancillary overflow parking.”
By 2023, K2’s owners pursued a major second phase: acquisition and redevelopment of the former Freewill Elementary School in Walworth (72,000 square feet) to serve as a new production facility and taproom destination. In total, the property is 42 acres.
Photo: K2 Brothers Brewing on Empire Boulevard in Penfield opened in late 2017.
The project was wildly ambitious. Plans included turning one of the school’s gymnasium into a brewery, the cafeteria into a taproom, and further features such as event spaces, outdoor amenities, and a huge assortment of other attractions designed to lure people to Wayne County. The Kennedys purchased the school property for approximately $1.45 million, according to public records.
“We envision this place being a mix of Dave and Buster’s, Lasertron, and Radio Social, and all under one roof,” Brad told me in an earlier interview.
The new system would allow K2 to pump out up to 300 barrels per week, meaning yearly production could top out at more than 15,000 barrels of beer. K2’s original space is maxed out and capable of producing about 2,000 barrels per year, the Kennedys told me in 2023. Before the expansion, K2 was contracting some batches at Young Lion Brewing in Canandaigua. Once Young Lion closed and sold its system and space to Other Half Brewing, K2 stepped in and bought the Young Lion brand and recipes. It continued to make and market Young Lion beers through the new Wayne County facility. After the latest filing, it’s unclear what will become of the Young Lion brand.
Unfortunately, the expansion did not go as projected. In March, the Cleveland Prost broke news of K2’s immediate closure of the Walworth facility less than 15 months after its opening. Mug club members were alerted in an email the night before, while the news was shared with the public the next morning via social media. The closure notice cited rising ingredient and materials costs, underperforming sales, and a series of “unexpected and unfortunate events” as reasons. K2 said the closure was “ultimately forced by the bank” — implying financial pressure or enforcement action tied to its loans.
The original Penfield location at Empire Boulevard remained open and continued operations, including beer production. It’s unclear what has been done with the massive, sparking new 20-barrel brewhouse system at the Walworth location.
Meanwhile, K2 Brewing also faced other legal and financial pressures. In the months before closing the Walworth site, the brewery was hit with a court order to pay $43,370 to Palmer’s Food Services for supplied goods. Another lawsuit from Servpro for $299,970—for cleaning and restoration services related to the Freewill building—was active when news of the closure broke. Judgment in that filing was issued in June and totaled $355,474.82. On top of that, the brewery’s Penfield location was served with a $115,160 state tax warrant in February.
These legal, tax, and operational pressures paint a more complicated picture behind the foreclosure filing — one in which K2’s ambitious expansion may have overextended its resources.
What the CNB complaint claims
The bank’s complaint alleges that in May 2023, CNB extended two loans to K2 and its holding entities: A first mortgage loan for just over $2 million, followed by an interim loan for another $2 million.
These were secured by first mortgages on both the Walworth (Freewill School site) and Penfield (Empire Boulevard) properties. The Kennedys and their entities (4320 Canandaigua Rd LLC and 1221 Empire Blvd LLC) guaranteed the loans.
The complaint claims that both loans fell into default in 2025. A default notice was issued on May 2, 2025, but no resolution was reached. As of September 3, 2025, the total had ballooned to $4,725,684.30, accounting for interest, late fees, penalties, and legal costs. The complaint states interest accrues at about $965 per day across the loans.
CNB is asking the court for:
Foreclosure of both properties (Walworth and Penfield);
Judicial sale of the properties and application of proceeds to the debt;
For context, these are the other named defendants: Wayne County Economic Development Corporation (WCEDC) holds a subordinate mortgages totaling over $700,000 on the properties. Wayne County Industrial Development Agency (WCIDA) holds a subordinate PILOT (payment in lieu of taxes) mortgage for $315,000. Hill Top Enterprises, Inc. holds a mechanic’s lien against the Walworth property. The New York State Department of Taxation and Finance is a potential lienholder for unpaid taxes. It also includes a number of John Doe defendants as placeholders for any any unknown lienholders, tenants, or interested parties;
Extinguishment of all subordinate liens (including those held by WCEDC, WCIDA, Hill Top, and state tax liens);
Appointment of a receiver to manage the properties and collect any income during litigation;
Award of deficiency judgments against the guarantors and borrowers if the sale does not cover the balance;
Reimbursement for attorneys’ fees, costs, taxes or insurance the bank may pay to protect its collateral.
If granted, K2’s ownership interest in those properties—and all subordinate claims—would be wiped out. CNB also aims to fully enforce its security position and avoid dilution by other creditors.
There hasn’t yet been a publicly posted response to the lawsuit, according to state court records.
August lawsuit
A Utah-based financing company is also suing K2 Brewing and its co-owner, Bradley Kennedy, in Monroe County Supreme Court, alleging the brewery defaulted on a repayment agreement tied to a short-term business loan.
In a complaint filed August 5, 2025, CFS CAP, LLC, which operates as CashFund, claims it provided K2 with $60,000 in upfront financing on April 30, 2024, through what it called a “Merchant Agreement – Total Revenue Program.” In return, K2 Brewing agreed to repay the company by giving it 9.3% of all future sales revenue until CashFund had collected $111,000.
The contract required K2 Brewing to deposit all business proceeds into a designated account and authorized CashFund to make automatic withdrawals. Kennedy also signed a personal guarantee, pledging to be personally responsible for repayment if the brewery defaulted.
According to the lawsuit, K2 Brewing stopped making payments before satisfying the agreement, leaving a balance of $38,164. CashFund says it met its obligations by providing the funds and that the brewery failed to uphold its side of the deal despite repeated demands for payment. The filing accuses K2 Brewing of breach of contract and unjust enrichment and seeks to recover the remaining balance, interest, attorneys’ fees, and court costs.
Neither K2 Brothers Brewing nor Kennedy has yet responded publicly to the lawsuit.
Implications and outlook
The foreclosure suit marks a significant turning point for K2 Brothers Brewing. What started as a promising Penfield craft brewery now faces the prospect of losing both its expansion property and possibly financial exposure for the owners. The abrupt closure of the Walworth facility underscores the risks tied to overexpansion, rising costs, and legal entanglements.
That said, K2 still retains its original Penfield location, which has long been its core business. The question now is whether that location alone can carry the brand, satisfy outstanding liabilities, and perhaps form the basis of recovery.
From a legal standpoint, K2 and the guarantors will have to respond to the complaint in court, potentially contest subordination issues, valuation of the properties, and the amount of debt claimed. If the court allows CNB to sell the collateral and enforce deficiency judgments, the Kennedys and their entities could face serious financial exposure beyond just losing the Walworth property.
In an email to mug club members in March, the brewery promised to refocus its efforts and resources on the original location. The email read, “This is absolutely not what anyone wanted to happen, but if there is a silver lining to all of it, we are going to be 100% focused on making Empire the absolute best version of itself possible! All of our energy and resources will be going into the original K2 location.”
So we’ll see what the future holds. But I’m hoping for the best for all involved.