Reacting to: 'Insufficient funds' to pay Brewdog creditors after takeover deal (BBC News) →
My honest reaction to this one: the headline figure everyone will quote is the £2.4m Brewdog's retail arm couldn't pay HMRC. That's real, and it matters. But it isn't the number that should worry a small business owner reading this story. The number that should worry you is the one further down the report — the roughly £190m owed to unsecured creditors, who are now expected to get less than a penny in the pound. Because somewhere in that £190m, and in the separate £20m left unpaid when the deal was struck, are hundreds of ordinary UK businesses: coffee shops, bakeries, laundry services, lawyers, holiday parks. Not banks. Not private equity. Businesses that did the work, sent the invoice, and are now finding out what "unsecured creditor" is actually worth.
My view is that this case is a genuinely useful, if brutal, illustration of something every business that sells on credit terms needs to understand and rarely thinks about until it happens to them: being owed money by a company that collapses does not put you in a queue that eventually pays out. It puts you in a queue that, in Brewdog's case, simply ran out of money before it reached you at all — and that was true even for creditors who were supposed to be paid first.
What was reported
The BBC reports that administrators AlixPartners have filed a progress report on Brewdog's retail arm confirming there are now "insufficient funds" to repay even preferential creditors, let alone unsecured ones. That includes £2.4m owed to HMRC for unpaid VAT and £489,000 owed to staff for unpaid wages and holiday pay — staff have instead had to claim compensation from the government's Insolvency Service; the administration itself will not pay them. AlixPartners blamed lower than expected proceeds from selling off Brewdog's assets, combined with unforeseen costs securing closed pubs after "unauthorised occupiers" gained access to a number of them.
The scale of the asset sales makes the shortfall concrete. A 7.8-acre field in Potterton, Aberdeenshire, sold to a local farmer for £41,300. Nine Brewdog vehicles, described as being of "old age and varying roadworthiness", raised just £6,250 between them — the rest were abandoned. A batch of drinks equipment sold to Marylebone Cricket Club, which owns Lord's, raised £62,000. These are the kinds of numbers that show up when a company's most valuable assets have already gone and what's left is being sold for whatever it will fetch.
Zoom out and the wider picture is bigger again. Brewdog, founded in Aberdeenshire in 2007 by James Watt and Martin Dickie, carried more than £500m of debt when it was sold in March to US drinks firm Tilray in a £33m rescue deal. That takeover closed 38 bars immediately, made 440 staff redundant, and left £20m in unpaid bills owed to hundreds of UK businesses — the BBC specifically names coffee shops, bakeries and laundry services, alongside lawyers, councils and holiday parks, plus larger creditors including West Ham United FC, Lord's Cricket Ground and Manchester University. Brewdog's single biggest creditor, HSBC, was owed more than £61m; it has recovered tens of millions already but still faces an estimated £16.8m shortfall. Private equity backer TSG, which took a 22% stake in 2017, is set to lose £27.6m. About 200,000 crowdfunding investors in the "Equity for Punks" scheme — who typically put in around £500 each for shares, discounts and perks — have been told their shares now have "no value" at all.
What "less than a penny in the pound" actually means: a worked example
This is illustrative, but it uses the real figures from the report. Unsecured creditors are owed around £190m in total and are expected to recover less than a penny in the pound — under 1%. Picture a small commercial laundry that supplied linen and towels to several Brewdog pubs, invoiced monthly, and was owed £8,000 when the administration began. Under "less than a penny in the pound", that laundry can expect to recover under £80 of the £8,000 it is owed — and it may take months, or longer, for even that to arrive, if it arrives at all. A local bakery owed a smaller, more typical trade debt of £1,500 can expect under £15 back. Meanwhile the laundry and the bakery will each have already accounted for that sale in their own VAT return and paid HMRC the VAT on an invoice they were never actually paid for, unless they were on cash accounting or have separately claimed bad debt relief.
Contrast that with HSBC, a secured creditor, which has already recovered tens of millions of pounds of its £61m exposure. The ranking that governs an administration — administration costs first, then secured lenders, then preferential creditors (employee wage and holiday arrears up to a statutory cap, plus VAT, PAYE and employee NIC owed to HMRC, which has ranked as a secondary preferential creditor since December 2020), then unsecured trade creditors, then shareholders last — is exactly why a bank walks away with most of its money while a laundry gets pennies. What makes Brewdog's retail arm unusual is that even preferential status wasn't enough here: the money ran out before it reached that tier at all, which is why HMRC's own £2.4m VAT claim in that entity also goes unpaid, on the same terms as everyone below it.
What it means depending on where you sit
If you invoice on credit terms and have one or two customers who account for a large share of your turnover. This is concentration risk, and it is exactly what turned a Brewdog contract from good news into a bad debt for hundreds of small suppliers. Check what percentage of your revenue sits with your biggest customer. If it's above roughly 20–25%, that customer's payment terms and financial health deserve closer scrutiny than a smaller account would, because the impact of losing them is proportionally larger.
If you're currently owed money by a customer that looks shaky — late payments, requests to extend terms, rumours in the trade. Don't wait. Tighten terms on new work (deposits, shorter payment windows, or cash on delivery), and chase existing invoices the moment they go overdue, before they have a chance to quietly age. If a customer does go into administration, register your debt with the administrators in writing immediately; it is not automatic, and a payout, however small, is not guaranteed to those who don't ask.
If you're a company owner-director wondering whether this could happen to you as the debtor. The distinction that mattered here was which legal entity within the Brewdog group owed the money. The retail arm couldn't pay its £2.4m VAT bill to HMRC; the separate parent company, BrewDog PLC, is still expected to pay its own £3.66m HMRC bill in full, because that entity had the funds. If you operate through more than one company, keep each entity's cash position and liabilities visible separately — group-level solvency can hide a single entity that's already in serious trouble.
If you want to see concentration and bad debt risk before it becomes a crisis. Regular management accounts are what surface this: a rising debtor balance against one customer, slowing payment days, a customer's own public filings showing distress. None of that requires hindsight if someone is actually reviewing the numbers monthly. Our Management Accounts service is built for exactly this — visibility while there's still time to act on it.
What is still uncertain, and when you'll know
The final recovery rate for unsecured creditors. "Less than a penny in the pound" is AlixPartners' current estimate; a final, audited figure is still to come. It could move slightly as remaining assets, including in the United States, are sold and administration costs are finalised. There's no published date for a final distribution in the BBC's report.
Whether HSBC's £16.8m shortfall narrows further. The report notes this could reduce through asset sales in the US, where Tilray (a US-listed company) now controls Brewdog's brand and operations. No timeline is given.
What happens to the roughly 736 staff who transferred to Tilray versus the 440 made redundant in March. The BBC's report doesn't cover ongoing employment terms under the new owner, only the redundancy and compensation position for those let go at the point of sale.
Two things worth doing this week
- List your top five customers by revenue and check what share of your total turnover each one represents. If any single customer is a large fraction of your income, that's the relationship to review payment terms on first.
- If you have any invoice more than 30 days overdue right now, chase it today. The businesses in this story who are owed money didn't get a warning that Brewdog was about to run out of cash for creditors — by the time administrators are appointed, it's already too late to improve your position.
Nothing here is about Brewdog specifically once you strip the brand name away. It's about what "owed money" is actually worth once a customer runs out of cash, and how little warning most suppliers get before that happens. Our Cashflow & Budgeting service is built to keep exactly this kind of exposure visible, month by month, well before it turns into a write-off.