Black Sheep Brewery: Taxpayers and creditors due to lose out on £4m from administration

Directors Charlene Lyons, Robert Theakston and Jonathan Theakston all became directors and minority shareholders in the new company set up by Breal to continue running the Black Sheep operation.

The move secured the future of the business after Black Sheep made a £1.6m loss in 2022/23 as it struggled with the fallout from the pandemic and rising costs.

Three of the four local pubs the firm ran in Yorkshire were closed down following the ownership change while hundreds of shareholders lost out as the business’s structure changed from a public listed company to a private limited company.

At the time of the sale, creditors were owed around £6m. This included a large proportion of two Government-backed Covid loans that had been taken out by the brewery.

In August 2020, it took out a £3.125m Coronavirus Business Interruption Loan Scheme (CBILS) and in July 2022, took out a further £1.6m from the Recovery Loan Scheme (RLS) initiative.

At the time of administration, £2.5m of the CBILS loan and all £1.6m of the RLS loan remained outstanding.

A new progress report has now been published by administrators Teneo Financial Advisory.

It states that £2.26m has been repaid towards the loans from lender Close – leaving £1.84m outstanding.

Both loans are backed by the Government, meaning 80 per cent of the outstanding CBILS money and 70 per cent of the RLS loan will be covered by the state.

Meanwhile, £135,000 owed to HMRC in connection to the pubs arm of the business will not be repaid and while some of a further £1.2m owed to HMRC from the brewery side is expected to be returned, a final figure is yet to be confirmed.

Dozens of unsecured creditors collectively owed more than £1.5m have been told they are “unlikely” to receive any of their money back.

There will also be no return of money to a company called Dewscope, which provided £500,000 in loan notes in January last year.

Some money has been repaid.

Close, which was owed £6.3m including the Covid loans, has had £4.46m returned.

An outstanding £1.5m asset finance arrangement with Lombard relating to bottling and packaging equipment is not expected to be adversely affected by the transaction.

Teneo’s report said: “We are satisfied that the sale represented the best outcome for the estate.”