High Security Costs and Disappointing Asset Sales
A key factor in the lack of funds available for distribution was the unexpectedly high cost of managing the estate after the bars were closed. AlixPartners revealed that the administration process incurred significant, unforeseen expenses related to the security of the vacant premises.
Following the immediate closure of the 38 pubs in March, several of the empty properties were targeted by "unauthorised occupiers" who managed to gain entry and occupy the sites. To resolve these situations and secure the properties, the administrators had to work extensively alongside landlords and legal teams to initiate eviction processes and secure the premises. The legal fees and heightened security measures required to protect these vacant buildings significantly depleted the remaining funds that might otherwise have been distributed to creditors.
At the same time, the process of liquidating the retail arm’s physical assets yielded disappointing results. The sale of bar fixtures, fittings, brewing equipment, and other retail assets raised only minor sums of money, falling far short of what was needed to address the company’s vast liabilities.
Secured Creditors and the Parent Company’s Liabilities
While the retail arm of the business has been left entirely hollowed out, the financial dynamics differ slightly for the parent company, BrewDog PLC. Unlike the retail division, the parent company is still expected to settle its liabilities to its primary preferential creditor, HMRC, in full. This outstanding tax bill totals approximately £3.66 million and consists primarily of unpaid VAT and excise duty.
However, the secured financial institutions that funded BrewDog’s aggressive global expansion are also facing substantial write-downs. The company’s single largest debt was held by the global financial services group HSBC, which was owed more than £61 million across its various banking and lending arms.
Through the restructuring and rescue process, HSBC has managed to claw back tens of millions of pounds. Despite these recoveries, the bank is still facing an estimated shortfall of £16.8 million. The administrators noted in their report that this outstanding deficit could potentially be reduced in the future through the ongoing sale of remaining corporate assets located in the United States.
The collapse has also dealt a heavy blow to BrewDog’s major institutional backers. Private equity firm TSG Consumer Partners, which acquired a 22% stake in the brewer in 2017 to fund its international growth, is set to lose £27.6 million as a result of the administration and subsequent restructuring.
