Deep Creek brewery collapse: How much is owed to creditors and staff
Deep Creek Brewing co-founders Paul Brown (left) and Jarred Maclachlan.
The first liquidator’s report on craft beer brewer Deep Creek shows the company owes more than $3.5 million to creditors and staff in wages, and that’s just the beginning.
Deep Creek was put into liquidation last week after an exporting problem left a big hole in its accounts and the brewer was unable to secure additional funding to cover the shortfall.
Paul Vlasic and Derek Ah Sam from Rodgers Reidy were appointed liquidators for Deep Creek, which was founded by Jarred Maclachlan, Paul Brown and Scott Taylor in Browns Bay on Auckland’s North Shore in 2011.
The first liquidators’ report for Deep Creek Brewing shows preferential employee claims for unpaid wages and holiday pay totalling $116,000.
It’s estimated unsecured creditors are owed $3.5m, including Accident Compensation, Auckland Council, Foodstuffs North Island, Ebay, Mercury Energy, Mainfreight, NZ Post, Spark, New Zealand Hops Limited, Beerfridge and Craft Beer Capital.
The liquidators are still investigating how much is owed to Inland Revenue and other secured creditors.
ASB Bank, listed as a secured creditor, is owed $603,845.
The liquidators’ report listed assets owned by Deep Creek including plant and equipment totalling $866,065 and $300,000 in inventory.
Deep Creek is also owed $540,906 from debtors. The liquidators said in their report that they would be taking steps to recover the outstanding amount and ensure all invoicing is undertaken for the work completed up to the date of liquidation.
However, the report said it was unable to reliably estimate the likely recoveries.
The liquidators are looking to sell all assets owned by Deep Creek at public auction.
Deep Creek’s downfall came after a one-off can seaming issue on the production line put an end to a shipment on its way to China, leaving the brewer with an estimated $450,000 hit to its cashflow.
The result of this left the company unable to pay its debts as they fell due.
“It was a failure of a piece of product in the plant that actually seals the lids on the cans. That wasn’t up to spec when the shipment left,” liquidator Ah Sam told the Herald last week.
“When they arrived in China, some of the cans were leaking so the Chinese said ‘we don’t want this product’.”
It’s been a horror few months for the craft brewing sector.
Epic Brewing Company called in insolvency specialists in July after experiencing financial difficulties blamed on Covid-19 and increased costs.
But that craft beer brewer found a new buyer a month later.
And in August, Brothers Beer was put into voluntary administration after suffering from Covid-era hospitality restrictions and subsequent inflationary pressures.
Cameron Smith is an Auckland-based journalist with the Herald business team. He joined the Herald in 2015 and has covered business and sports.