Brewery Industry

Case Study 1 – Micro-Brewery Rapid Expansion Leading To Shortage Of Working Capital

The Challenge

A fast-growing micro-brewery faced a severe financial crisis in early 2023. The company’s rapid expansion had not been supported by sufficient working capital, making it vulnerable to external shocks. A major setback occurred with the cancellation and postponement of two substantial orders from a national supermarket chain. This resulted in a total loss of an order worth £100,000, with the stock becoming effectively scrap. The situation was compounded by a fire at the original brewery site in 2016, a complete shutdown during COVID-19, and increased competition from similar micro-breweries in the same area. The company’s invoice finance provider took fright and capped the draw-down from the factoring facility, which further squeezed cash flow. The company had a total of £12,271 in primary preferential creditor claims, £95,642 in secondary preferential creditor claims, and £171,572 owed to floating charge creditors. The total unsecured creditor debt, including employee claims, trade creditors, contingent creditors, and connected creditors, amounted to over £265,000. The managing director, having produced a cash flow forecast showing a significant “cash flow hole,” knew he had to seek expert help.

The Solution

The managing director contacted RMT, and after an initial meeting and due diligence checks, the firm was appointed to assist with a Company Voluntary Arrangement (CVA). RMT’s approach was to develop a comprehensive rescue plan that would provide the company with the financial breathing room it desperately needed. Over a three-month CVA preparatory period, RMT helped the managing director produce a detailed forecasting model and conduct “what if” scenario planning to identify the best trading model for the CVA. RMT’s creditor liaison team worked tirelessly, keeping all creditors, including the landlord, informed of the company’s progress. They also successfully sourced a new invoice finance facility to replace the old one, which was a crucial step in stabilizing cash flow. The CVA proposal offered a fair repayment plan to creditors, reflecting the company’s new, more realistic trading model.

The Results

The CVA was a complete success. Just three weeks before the creditors’ meeting, a new invoice finance facility was secured, which enabled the company to repay RBS in full. The secured NatWest CBILS loan will also be repaid in full over time. The rest of the creditors approved the CVA, with HMRC, as the secondary preferential creditor, set to be paid 100p in the £1. Unsecured creditors will receive 61p in the £1, a much better outcome than a liquidation would have provided. The new landlord, who acquired the premises during the CVA preparatory period, was bound by the CVA, preventing them from taking adverse action. The company is now trading well, having learned from its past mistakes and is focusing on working with SME customers instead of large supermarket chains. This case demonstrates that with a proactive approach, a detailed plan, and expert advice, a viable business can overcome a devastating cash flow crisis, restructure its operations, and secure a successful future.

Case Study 2 London Bar and Brewer Weighed Down By 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, took proactive steps to safeguard the business by proposing a Company Voluntary Arrangement (CVA). RMT 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.