Brewdog's unpaid workers to receive nothing after takeover deal
Administrators say about £489,000 was owed for staff wages and holiday pay and £2.4m was owed to HMRC for unpaid VAT.
Former Brewdog employees and several creditors of the defunct Scottish brewery are not anticipated to receive any compensation from the administration proceedings, according to a report by administrators AlixPartners. The company, based in Aberdeenshire, had accumulated debts exceeding £500 million when it was acquired in March for £33 million by US drinks firm Tilray in a rescue deal.
The administrators revealed that approximately £489,000 was owed for employee wages and accrued holiday pay, with an additional £2.4 million owed to HMRC for unpaid VAT. The deal resulted in the closure of 38 Brewdog establishments across the UK, amounting to £20 million in unpaid bills to hundreds of UK businesses, including coffee shops, bakeries, laundry services, legal firms, councils, and holiday parks.
Creditors included West Ham United FC, Lord's Cricket Ground, and Manchester University. AlixPartners stated there were insufficient funds to repay preferential creditors, due to lower-than-expected funds raised from the sale of Brewdog assets and increased costs during the administration period. The administrators attributed unforeseen expenses to the security of closed Brewdog pubs following unauthorized occupants gaining access.
The report highlighted minimal funds raised from asset sales, including a 7.8-acre field in Potterton, Aberdeenshire, sold to a local farmer for £41,300; nine old and worn-out Brewdog vehicles generating £6,250 from a single sale; and a settlement with Marylebone Cricket Club that produced £62,000. The parent company BrewDog PLC is expected to fulfill its obligation to HMRC for £3.66 million in tax owed, mainly VAT and excise duty.
Brewdog's largest debt was owed to HSBC, approximately £61 million across various banking arms, for which they have made partial recoveries but still face an estimated shortfall of £16.8 million. Private equity backer TSG, which holds a 22% stake in Brewdog, is set to incur a loss of £27.6 million. Unsecured creditors are expected to receive less than a penny on the dollar.
In March, 440 staff were made redundant, and 736 employees were transferred to Tilray upon Tilray's acquisition of Brewdog's brand and UK operation. Eleven bars were retained as part of the sale, while 38 other pubs closed instantly. Former employees can claim for unpaid wages through the UK government's Insolvency Service. AlixPartners informed workers of this support.
Brewdog's collapse also rendered the shares of around 200,000 crowdfunding investors worthless, as AlixPartners confirmed that investors would receive no return on their shares. The administrators stated these shares now held no value. Founded in 2007 by James Watt and Martin Dickie, Brewdog had four breweries and approximately 100 pubs worldwide at its peak.
Watt expressed his heartbreak over the collapse and apologized to staff and investors. Tilray, Brewdog's owner, has been approached for comment.
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