The parent company of Minnesota's largest brewery filed for bankruptcy protection Thursday to save itself from insolvency and debt collectors.

Jack Lee, president and CEO of MBC Holdings Inc., the parent company of Minnesota Brewing Co., said a Chapter 11 filing was the best option after he was unable to get a subsidy from St. Paul for a private refinancing of the brewery.

The St. Paul-based maker of Grain Belt beer lost $3 million last year and has racked up more than $7 million in debts to suppliers and vendors. The brewery's bank debt also stands at $7 million.

While Lee has managed to keep the brewery's doors open for the past several weeks, creditors have been knocking at the door and slowly foreclosing on its accounts.

With protection against creditors, Lee plans to turn the brewery's finances around with the help of $3 million in private investment from Bruce Hendry and other owners of Gopher State Ethanol, which is attached to the brewery but operates as a separate company.

Lee said the ethanol investors stepped forward after hearing encouraging words about the importance of the brewery and its jobs from St. Paul Mayor Randy Kelly and Council Member Chris Coleman.

Lee said he'll use the new money to fix the brewery's ailing bottling line and reorganize its debts. With an improved financial structure and efficient bottling line, the brewery has enough business at hand to be profitable in 2002, Lee said.

Lee ran into trouble last year when an upgrade of his bottling line went bad. The equipment he bought never worked properly. Meanwhile, he battled neighbors and the City of St. Paul on noise and odor problems associated with the brewery and ethanol plant.

Under Chapter 11, Minnesota Brewing will continute to operate and employ about 160 workers. However, the company is seeking an 18-month contract extension for brewers and bottlers. He also said that some workers' hours have been cut.

In management ranks, there have been deep job cuts, Lee said.