Liquidators expect return for Sample Brew creditors
The liquidator of Sample Brew Pty Ltd, which entered administration in May 2019, has advised unsecured creditors that they can expect a return of twenty-three cents in the dollar following the liquidation of the company.
The Melbourne-based contract brewing business went into administration with debts initially estimated to be $300,000. However, in a report to creditors last December, the liquidator said after investigations he was aware of debts totalling more than $1 million.
Over his investigations the liquidator found non-related unsecured creditors were owed $972,744, unsecured related-party creditors, the company’s directors, added $227,000. Secured creditors have also been paid more than $270,000, while priority creditors, which included outstanding employee entitlements, totalled $104,088.
The major unsecured creditor, the Australian Tax Office, was owed more than $510,000. The liquidator’s report noted that an unfair preference payment of more than $326,000 had been made to the ATO prior to the administrator being appointed, of which he negotiated the return of $250,000.
An unfair preference is a payment that has the effect of giving preferential treatment to one unsecured creditor over other unsecured creditors in the liquidation of a company.
Last December’s report said potential breaches of director duties had been identified and the liquidator had lodged a report with ASIC. While the report did not specify the nature of the breaches, a September 2019 report noted potential claims for insolvent trading against the directors.
In the latest report, the liquidator advised ASIC has indicated that it did not propose to take further action.
Unsecured creditors seeking a final distribution are required to submit a formal proof of debt form to the liqudator by 13 January 2023 if they haven’t already.
Big plans went flat
Sample Brew launched its first beer in 2013 and in late 2017 began an Expression of Interest campaign through equity crowdfunding platform Birchal. During that campaign, Sample said it had secured more than 500 accounts nationally, and foreshadowed plans to export to China, Hong Kong and other global markets.
As part of its Birchal offer, Sample said that its “business model is structured for fast, accelerated growth through a four-tier strategy of superior production, sales, marketing and brand experience.”
“Our fast growth is clear proof of the demand for our premium offering. We currently hold 0.7% of the market share, based on IBISWorld data,” the company said.
At the time of its crowdfunding campaign the company told The Australian it had sales of $2.3 million for 2016 and that it was “well on track to turnover more than $4 million” in 2017.
However, the liquidator’s September 2019 report indicated the business had revenues of just $558,284 in the year to 30 June 2017, $2.7 million in 2018 and $2.2 million to 14 May 2019. The report said the company had “traded at a loss since at least March 2017”.
After expressions of interest closed with Birchal in late December 2017, the crowdfunding offer quietly lapsed. However, founder Vedad Huric told the Sydney Morning Herald in January 2018 that he had been “overwhelmed by the response”, with close to $2 million in potential investment promised.
Birchal co-founder Matt Vitale told Brews News at the time Sample entered administration that the brewer had discontinued the campaign.
“Despite really strong interest in the EOI campaign, I believe Sample ultimately took the view that a public company structure was not right for them,” Vitale said.
A 2019 liquidator’s report said that Sample Brew, which was selling approximately 500,000 litres per annum, had attributed the failure of its business to increased competition in the craft beer industry, low margins on product and insufficient sales.
Brand lives on
Despite creditors voting to wind up the company that created the brand, the Sample brand will live on.
The liquidator initially negotiated a sale of the brand to drinks marketing company East 9th Brewing in July 2019 for $350,000.
In September 2022, the brands were in turn sold to Crush Wine and Drinks for an undisclosed sum.
Crush managing director Matt Schmidt told Brews News last week his company had big plans for the brand.
“We’ve admired the Sample Brew brand for some time and when the opportunity came up [late last year] we purchased all of the stock and brand IP,” he said.
“We have a huge amount of respect for East 9th and the great work they did and as the new custodian of Sample Brew we look forward to guiding the brand to the next chapter of its growth journey.”
“After spending 10 years with Foster’s Group, I’ve seen brands come and go, and while quite Victorian centric now, Sample has what it takes to transcend borders and appeal to national, and even international, consumers.
“Our management team has strong experience building beer brands, so we’ll be drawing on this experience for Sample’s growth.
“We’ll be undertaking extensive NPD and will be releasing a crisp Lager in Q1 of 2023 in the popular golden can design, which we’re really excited about.”