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Gold Coast-based craft beer maker Black Hops Brewing was sold for $3.2 million following an offer accepted by secured lender Judo Bank (ASX: JDO) earlier this year, or less than half of the $7.3 million owed to creditors after the company was placed into voluntary administration in March.
The price paid by a consortium of shareholders to resurrect the Black Hops business has been revealed for the first time in the liquidators’ report released this week.
It’s a far cry from the $65 million the company was said to be worth after a record-breaking crowdfunding campaign in 2022 that raised $2.2 million from almost 1,000 investors in 24 hours.
Judo Bank, as the company’s only secured lender, called the shots on the sale of the business which liquidators David Mansfield and Tim Heenan, of Deloitte, say was the best offer on the table at the time after putting the business on the market.
The acquisition by Black Hops Craft and Green Hops Brewing, which were new entities established by a consortium of Black Hops Brewing shareholders and “other supporters” to resurrect the business, was completed on 4 July 2024.
However, the aftermath of the sale has left Judo Bank about $1.7 million in the hole and unsecured creditors looking at a return of about 4c in the dollar for the debts that the failed company owes them.
Judo Bank had about $3.25 million in secured debt owed by Black Hops Brewing, but under an agreement reached for the sale of the business it will receive less than half of this amount from the liquidation process.
“Judo Bank consented to the sale of the company’s business and assets and received $1.5 million from the sale in exchange for a partial release of its security to allow the sale to complete,” say the liquidators in their report.
“Following the finalisation of all trading payments, we will confirm if any further payments are required to Judo Bank from the sale proceeds in accordance with its security.”
However, the liquidators say they “do not anticipate any additional asset recoveries subject to Judo Bank’s security”.
“Any shortfall in Judo Bank’s debt will rank as an unsecured debt of the company,” say the liquidators. “Prior to the second meeting (of creditors), Judo Bank submitted a claim in the amount of $1.8 million.”
This means Judo Bank can expect an extra $72,000 from the unsecured creditors’ pool to add to the $1.5 million it has already received for its secured debt.
Including the balance of Judo Bank’s claim, unsecured creditors are owed about $5.6 million, with the debt to the Australian Taxation Office comprising about $3.1 million of this total.
The liquidators say that any distribution to unsecured creditors remains “contingent upon future asset recoveries and other legal recoveries” such as voidable transactions.
“At this stage, a dividend to unsecured creditors is uncertain,” say the liquidators.
The Deloitte liquidators estimate total voidable transactions of more than $313,000 and total unfair preference payments of more than $236,000.
“We are currently undertaking recovery action in respect of these payments, and we will shortly issue demands for payment in respect of the claims,” say the liquidators.
“In the event that these claims are defended by the relevant creditors, we will assess the likely legal costs that would be involved in pursuing further recovery action.”
Black Hops Brewing collapsed on 28 March 2024 after being hit by a sharp downturn in its business that led to two consecutive years of lower sales in FY23 and FY24 of 10 per cent and 20 per cent respectively.
The company, which was founded in 2014 by Daniel Norris, Michael McGovern and Edward Oldfield, operated a craft beer brewery and taprooms across two sites on the Gold Coast and one in Brisbane prior to voluntary administrators being appointed.
Under the new ownership, the company continues to operate its Burleigh Heads taproom and its main production brewery at Biggera Waters on the Gold Coast.
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