HSBC to recover £42m of £61m as 200,000 equity punks lose investments

James Watt has offered former BrewDog investors free shares in his new beer business, Second Best, after being rebuffed in his bid to buy the collapsed brewer back from administrators. Multiple recipients of the share offer complained to the UK’s Information Commissioner’s Office, which regulates data privacy, saying they were concerned Watt had not obtained their contact details legally. Watt denies any wrongdoing.

Watt, who co-founded BrewDog with friend Martin Dickie in 2007, has previously said he was left “heartbroken” by the brewer’s collapse. After his bid to repurchase the company was rebuffed, he launched Second Best and Social Tip, a service that pays people to make social media posts about brands. His tenure at BrewDog was marked by controversies, including criticism for the dubious taste of marketing stunts and an allegedly “toxic” working culture, for which he apologised.

Administrators at AlixPartners said on Thursday that creditors owed more than £190m are unlikely to be repaid in full. The administrators cited “insufficient funds” to cover unpaid wages, tax owed to HM Revenue and Customs, and overdue bills from other businesses, and pointed to increased costs from removing “unauthorised occupiers” from BrewDog’s shuttered bars and the limited sums recovered from asset sales, including vehicles of “old age and varying roadworthiness.”

The March rescue deal in which US cannabis and drinks company Tilray purchased BrewDog’s brand, intellectual property, UK breweries, and 11 bars for about £33m did not include most of the brewer’s chain of bars. Some 38 bars were closed and 440 staff lost their jobs. Supposedly “preferential” creditors of the bars business who will not get their money back in full include the UK government, according to the administrators.

Lender HSBC is expected to recover about £42m of the £61m it is owed. Private equity investor TSG, which bought a 22% stake in BrewDog for £213m in 2017, saw its investment wiped out and will not recoup debts of nearly £28m.

Staff who were owed £489,000 in wages and holiday pay have already been compensated under the UK government’s redundancy payment scheme. But AlixPartners said there were not enough funds to repay that money to the government, or to pay £2.4m in taxes owed to HM Revenue and Customs. A separate sum of £3.6m owed to HMRC will be paid back.

Unsecured creditors — including Lord’s Cricket Ground, West Ham United FC, and Manchester University — will receive less than a penny in the pound, according to the administrators.

The collapse rendered worthless the investments of 200,000 “equity punks,” the small investors who had crowdfunded the business.