Black Sheep Brewery: Creditors and taxpayers to lose millions from firm's second administration in four years
Creditors and taxpayers are again due to lose out on millions of pounds following Black Sheep Brewery entering administration and immediately being sold to new owners for the second time in less than four years.
Details have emerged in a new Companies House filing after the business moved into new ownership last month, with more than £4m owed to the taxman and traders.
The Masham-based brewery first entered administration in May 2023 before being sold to London investment firm Breal Capital for £5m in a pre-pack administration deal – a process that effectively allows businesses to continue trading seamlessly as before with the same name but can cause controversy because of its impact on creditors owed money.
It was a deal that wiped out the value held by over 1,000 shareholders as well as leaving creditors and taxpayers with losses of millions of pounds.
Breal went on to buy a number of other breweries, which were combined into a single umbrella organisation called Keystone Brewing Group with ambitions set of building it up into a £100m-a-year revenue business.
Acquisitions included Warwickshire’s Purity Brewing Co, Leeds-based North Brewing Co and Huddersfield-founded Magic Rock.
However, Keystone and associated entities including the Black Sheep Brewing Company began filing repeated notices of intention to appoint administrators from November 2025.
Last month, it was announced the group had been sold to newly-formed firm The Great British Drinks Company to join forces with the owners’ existing Saltaire Brewery business.
A new report by administrators FRP confirms the pre-pack sale of parts of the business was done for £4.1m, with the agreement including the transfer of employees, the purchase of assets and a licence to occupy three pubs including The Three Legged Mare in York.
The report said at the time of the latest administration, Secure Trust Bank was owed £8.6m, with the firm expected to receive some money back but with an anticipated shortfall.
HMRC has an estimated £2m claim in respect of VAT, PAYE and Duty arrears linked to Black Sheep, with administrators stating it is expected there will be “insufficient funds” for money to be returned.
HMRC is also owed £1.6m in respect of the Purity Brewing Co part of the business, with no current expectation this will be repaid.
The report said trade creditors of Black Sheep are owed more than £2.2m, with more than £750,000 owed to creditors across other arms of the wider Keystone group.
It said: “It is currently anticipated that there will be insufficient funds to distribute to unsecured creditors in the administrations.”
The report said Keystone had employed around 150 workers and that after the group was established in 2023, restructuring had taken place with the aim of “consolidating the brands into a scalable and sustainable group”.
Changes including investments in Black Sheep’s Masham facility to increase capacity and modernise processes. But the report added that the business had continued to face challenges.
“Following the group's restructure, a combination of persistent cost inflation, margin erosion driven by sales mix and supressed consumer demand continued to adversely impact on the financial performance of the group,” it said.
"Further cash injections of £3.75m were made by shareholders in 2025, of which £1.5m was introduced in September 2025, in anticipation of a seasonal sales uplift over the autumn/winter period.
"Unfortunately, the seasonal sales uplift did not materialise.
"Despite shareholder investment and restructuring efforts, the Group experienced a severe cash shortfall, with a projected deficit of c£2m, making continued trading unsustainable without further support.”
It said FRP was engaged in November “In light of the upcoming cash shortfall and imminent threat of creditor action”.
It said that by December 12, seven offers had been received for the business with only one for the business and assets of the Group as a going concern and the others “for certain assets on a piecemeal basis, all of which presented a worst outcome overall when compared to the offer as a going concern”.
The report said purchaser Saltaire Brewery is not a connected party and received independent advice.
‘Plan to restore business’
The new team in charge of Black Sheep Brewery and its sister brands say they have a “strong investment plan to restore the business”.
Sunny Sharma, co-founder Great British Drinks Company, said: “Our thoughts are with all creditors who have been damaged by Keystone’s administration.
"The Great British Drinks company has settled all payment obligations as set out as conditions of sale, saved 145 jobs and has a strong investment plan to restore the business and back regional craft beer. Our ambition is to rebuild supplier and customer relationships.”
According to figures released recently by the SIBA UK Brewery Tracker, brewery closure rates increased dramatically during 2025 compared to previous years, with a 37 per cent spike compared to the previous year.
The UK now has just 1,578 individual breweries as of 1st January 2026, compared to 1,715 at the start of 2025 and 1,815 in 2024.