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Wayward Brewing and LDC exit administration
Sydney’s Wayward Brewing Company and Local Drinks Collective (LDC) have come out of administration after creditors agreed a repayment plan.
The craft beer businesses, which were on the edge of collapse at the start of the year when entering voluntary administration, had been reported to have owed around AU$2million to creditors, which included the Australian Taxation Office (ATO). However, creditors have since approved a Deed of Company Arrangement (DOCA) of 10 cents in the dollar for outstanding debts.
Naturally, the aim of the DOCA is to maximise the chances of the craft beer companies continuing and also to provide a better return for creditors than an immediate winding up of the businesses.
According to previous reports, the financial losses for the beer businesses were said to be due to declining consumer demand across the craft beer sector as a whole combined with a significant increase in brewery production costs.
In a report to creditors, the administrators revealed that the companies owed unsecured creditors, including suppliers, up to AU$730,000, with statutory creditors owed AU$1.9 million.
According to local reports; statutory debt included unpaid excise of AU$1.27 million and tax payable of AU$590,000.
The report stated: “Prior to the pandemic, the business was experiencing high growth and therefore expanded operations to handle this demand” and “during the pandemic, the business was supported by government programs and a moratorium on ATO excise payments, which enabled the business to remain solvent”.
The reported added: “Cost-cutting measures were implemented, but operations were not scaled back in anticipation of a business boost post-Covid.”
Despite this, the companies’ failure was attributed to changed business conditions, including a drop in consumer demand caused by inflation and increasing interest rates.
As such, the administrators have recommended that creditors accept the proposed DOCA, noting that it would provide a better return than liquidation.
The creditors were said to have voted in favour of the proposal, giving control of the business back to Wayward and LDC director Peter Philip and the companies’ management.
Speaking about the past month, Philip admitted it has been a “stressful time” and yet he also remarked on how “grateful” he was for everyone’s support and noted how the experience has made him and his team “more determined than ever to make the business successful”.
Philip explained: “We are grateful that the creditors have approved our restructuring proposal, and we thank the administrator, our business partners, and our employees for their support during the restructuring process, which has been the most stressful time of Wayward’s more than 10-year history. Our team is more determined than ever to make the business successful by producing great independent craft beverages for our loyal customer base.”
According to the administrators, taking this route forwards with the DOCA also means that 40 jobs will be saved in the process.
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