Offers for Melbourne brewery and taphouse Albatross Brewing are being welcomed by administrators after the business became insolvent.
Administrator Philip Hosking from Sydney insolvency accountants at Helm Advisory was called in to the business in June.
At the time Albatross founder and majority shareholder Steve Laughlin reportedly acknowledged the company’s “deteriorating financial position”.
The administrators said that the company faced insolvency as a result of poor financial management, as well as saturation and competition in the craft brewing market.
A Deed of Company Arrangement (DOCA) was initially suggested by the administrator.
A DOCA would save the company from liquidation, putting control of Albatross back in the hands of Laughlin through an alternative company, Kamehameha Enterprises, which was set up on 25th June according filings to ASIC, to enable the company to continue trading.
However no beer has been produced in the administration period, as Kamehameha did not have an appropriate liquor licence, and it has not paid its deed licence fee – which enables it to trade under the Albatross name – at all. This arrangement has now been terminated. Its lease for the Mordialloc site has also been terminated.
The financial terms of the DOCA stipulated that as part of a ‘Deed Fund’ $80,000 would be paid to creditors within 60 days.
Under the DOCA, priority creditors will receive a full return (100 cents in the dollar) and between 20 and 100 cents in the dollar for unsecured creditors. If a DOCA payment is missed, the company will automatically be wound up.
However the administrator raised concerns that Laughlin had the capacity to go through with the DOCA, saying there was a “high degree of uncertainty” that contributions would be paid into the Deed Fund.
Hosking said he had also received a number of complaints from creditors with respect to the director’s alleged misconduct. If the company enters liquidation, he said he would be required to file a report with ASIC, which could affect Laughlin’s future directorship prospects.
In a rare move, the administrator suggested that the best course of action would be for the company to be wound up if the business cannot be sold.
An initial meeting of creditors to discuss the DOCA on 24th July was then postponed after surprise interest from a prospective buyer.
The administrators advised this week that a further two interested parties asked for information, but there has been no expression of interest in the purchase of the business so far. One prospective buyer has subsequently withdrawn its interest.
The business may still be sold by a liquidator in the event that creditors vote to reject the DOCA and wind up the company at next week’s meeting (20th August), and there is no further interest regarding a potential acquisition.
Administrator Hosking said that he had been told the company failed due to an “adverse legal proceeding” and the engagement of “incompetent” business advisors.
However administrator Hosking said that his own investigations had found that it was down to poor financial management and record keeping, as well as insufficient working capital.
Overall, secured creditors are estimated to be owed $96.052.99. Unsecured creditor claims against the company are reportedly $326,361.12.
The administrator was advised that a loan of $146,560.90 from ANZ to the business is set to be transferred to Kamehameha Enterprises, although this has yet to be confirmed.
The administrator also said that Albatross faced “strong competition” due to the saturation of the craft brewery market.
Albatross blamed a damaged computer for its inability to access its accounting records for the year to 30 June 2018, but accounts are available for the previous year.
According to these unaudited results for the year to 30 June 2017, the company made a net loss of $198,487, with $45,809 made in total sales. During this year the company invested in its brewing operations in Mordialloc.
Albatross Brewing was founded in 2016 and started brewing operations in 2018 at their site in Mordialloc.
Steve Laughlin founded of the company after a 12-year career as a police officer. He was the majority shareholder, with family members Krista and Jared Laughlin owning the remainder of the business.
Albatross produced beers and ciders for New South Wales customers, and provided contract brewing services to enable other brewers to brew beers using their equipment, previously under the De Havilland Brewing brand.
Brewing equipment available includes:
- Plastic 1-tonne grain hopper with auger outfeed to grain mill 3Ph and auger outfeed
- Stainless steel 1,250-litre enclosed mash tun vessel with top mount agitator
- 2x stainless steel 1,250-litre enclosed vessels (Kettle & Whirlpool)
- 3,000-litre vertical hot water tanks with set of two electric heating elements
- Stainless steel glycol jacketed 3,000-litre vertical cold water tank
- 6x stainless steel jacketed, conical based 3,000-litre fermentation tanks
- Stainless steel vertical jacketed 1,000-litre Glycol tank with stainless steel transfer pump
- XHC XCA-10S refrigerated industrial chiller 3PH
- 40x stainless steel 50-litre beer kegs
For more information, Any interested parties to the business of equipment of Albatross Brewing should email the administrators at Helm Advisory at [email protected].
Disclosure: Brews News Pty Ltd was an unsecured creditor of Albatross Brewing in the sum of $722.00. We have so far abstained from voting in the creditors’ meetings.