A Leading London Brewer Facing Trade Disruptions, Inflation and Historic Debt

The Challenge

A pioneering London brewery, despite strong brand recognition and revenue growth, faced a critical financial crossroads. The company’s problems stemmed from a combination of trade disruptions, inflationary pressure, and significant legacy debt. These issues caused cash flow problems to reappear in late 2024 and early 2025, leaving the business unable to meet its financial obligations. The company was also burdened with substantial arrears, including £800,000 in rent and unpaid taxes. With a secured debt of £1.32 million and arrears on other loans and contracts, the board was faced with the difficult decision of whether to pursue a drastic measure like liquidation or a pre-pack administration. The company needed to find a way to honor its debts, protect a valuable brand, and save 59 jobs without sacrificing its future.

The Solution

The directors, with the support of RMT KSA Group, took proactive steps to safeguard the business by proposing a Company Voluntary Arrangement (CVA). KSA advised the board on an innovative restructuring strategy that involved splitting the two divisions of the business into a new holding company. This “hive up” of the core brewing operations to a new, clean entity was a strategic move to protect the brand’s reputation and future trading relationships. The “oldco” retained the hospitality division, including two bars and a live music venue, which would be managed under the CVA. The CVA proposal offered total contributions of £1.32 million over five years. It also secured a full repayment of 100p in the £1 for asset-based lenders and a payment holiday, while also ensuring 100p in the £1 for HMRC on its VAT, PAYE, and NIC liabilities.

The Results

The CVA proposal was a resounding success, with an overwhelming 99% of creditors who voted in favor of the amended proposal. The CVA’s approval protected a valuable brand and secured the long-term future of the business. The restructuring safeguarded 59 jobs and resulted in a successful “hive up,” which allowed the brewery to focus on a streamlined, profitable model. Creditors received a better return than they would have in a pre-pack administration or liquidation: secured and preferential creditors were repaid in full, while unsecured creditors received 12p in the £1, and associated creditors waived their claims. The company continues to operate successfully, and as Keith Steven noted, the hive-up keeps the original shareholders “whole” until the CVA is paid off. This case demonstrates that a CVA, when combined with a creative and powerful restructuring strategy, can preserve a viable business and secure a strong future for all stakeholders.