Canadian brewing equipment manufacturer goes bust

Diversified Metal Engineering went into receivership on 26 November, leaving many breweries having paid but without their orders.

Many craft breweries will be left without the equipment they ordered after DME went bankrupt.

One of North America’s largest and lonest-running brewing equipment manufacturers ceased operations on 26 November, following an order issued by the Supreme Court of Prince Edward Island in Canada.

The company’s receivership will cost craft brewers millions of dollars, who paid DME for equipment that will now never be produced.

DME was formed in 2016 after a merger between two brewery equipment manufacturers, Newland Systems (NSI) in Abbotsford, BC, and DME Brewing Solutions in Charlottetown, PE. Between them they have helped to construct more than 1,600 breweries.

All 165 employees at the Charlottetown site and all 150 employees in Abbotsford have been put out of work as a result.

According to beer writer Ben Johnson, who claims to have spoken to a number of craft breweries since DME went bust, “some breweries have hundreds of thousands and in some cases over a million dollars invested in future brewing equipment from DME that they are now unlikely to ever see and who are no facing the very real prospect of bankruptcy”.

Brewbound lists over a dozen unsecured brewery creditors still owed equipment by DME including Barrel Brewing, Anchorage Brewing, Diageo, Foam Brewers, Labatt, Lord Hobo, Maine Beer Company, Monday Night Brewing, Moosehead Breweries, New Belgium Brewing, Night Shift Brewing, Notch Brewing, Tired Hands Brewing, and Wicked Weed, among many others.

Speaking to Brewbound, Mahala Guevara, VP of Texas’ Big Bend Brewing, reiterated Johnson’s belief that the equipment manufacturer’s collapse will cause “a wave of breweries [to go out] of business or financially restructure significantly.”

Prince Edward Island’s Guardian also claims that about 50 local businesses are still owed money for goods and services provided to DME, but that they too are unlikely to ever see themselves compensated.

The Royal Bank of Canada is the secured creditor and is owed $18.1 million after interest and costs, while unsecured creditors are owed $27 million.

The application to appoint a receiver was made by the bank after DME defaulted on its loan payments.

The estimated value of DME’s assets is $71.7 million, and the receivers have set a deadline of 7 January to receive bids to acquire the business or its assets.