Wayward Brewing Company and Local Drinks Collective (LDC) have exited administration after their creditors approved a Deed of Company Arrangement (DOCA).
Under the DOCA, creditors, including the Australian Taxation Office (ATO), will receive 10 cents in the dollar.
The craft breweries – which entered voluntary administration earlier this month – faced financial losses due to declining consumer demand across the craft beer market and a significant increase in production costs.
In a report to creditors, the administrators advised that the companies owed unsecured creditors, including suppliers, up to $730,000, with statutory creditors owed $1.9 million. Statutory debt included unpaid excise of $1.27 million and tax payable of $590,000.
“Prior to the pandemic, the business was experiencing high growth and therefore expanded operations to handle this demand,” said the report.
“During the pandemic, the business was supported by government programs and a moratorium on ATO excise payments, which enabled the business to remain solvent. Cost-cutting measures were implemented, but operations were not scaled back in anticipation of a business boost post-Covid.”
However, the companies’ failure was attributed to changed business conditions, including a decrease in consumer demand caused by inflation and increasing interest rates, which became particularly apparent in the spring of last year when business usually grows.
The administrator recommended that creditors accept the proposed DOCA, noting that it would provide a better return to creditors than a liquidation.
The creditors voted in favour of the proposal, giving control of the business back to Wayward and LDC director Peter Philip and the companies’ management.
Philip expressed optimism about the future of Wayward and LDC, saying he was pleased that the administration period was over, saving nearly 40 jobs in the process.
“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,” he remarked.
Philips said that despite being in a very challenging time, the company is overwhelmed with outpouring support from its customers and business partners.
“Our team is more determined than ever to make the business successful by producing great independent craft beverages for our loyal customer base,” he added.
