FRP Advisory details administration of Black Sheep Brewery

The details have emerged in a filing from administrators to Companies House after the Black Sheep Brewery and sister operations were sold again last month.

They reveal HMRC and trade creditors are owed more than £4million, similar to the £4.1million-plus paid for the businesses by the newly-formed Great British Drinks Company, who own the existing Saltaire Brewery.

When the take-over was announced, the new owners pledged to spend a £2million investment plan to ‘restore’ the brewery in an overall £6.5million deal.

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As previously reported, the Black Sheep Brewery first entered administration in May 2023 before it was sold to London-based Breal Capital for £5million in a pre-pack administration sale.

Such sales, which has happened again, are controversial due to their impact on creditors owed money but they allow businesses to continue without disruption.

Breal bought further breweries, combining these into a single organisation called the Keystone Brewing Group. It also invested in Black Sheep’s Masham site as it aimed to consolidate operations and boost production there.

However, Keystone and related businesses in November began filing notices of administrator to protect the business operations from creditor action.

The administrator’s report, known as a Notice of Administrator’s Proposals, says the pre-packaged sale was for £4.1million, including the transfer of staff and the purchase of property, including the Three Legged Mare in York.

The report from FRP Advisory also reveals at the time of administration the Secure Trust Bank (STB) was around £8.6million. It is expected to receive some money but there will be a shortfall.

HMRC has a secondary preferential claim of £2million in VAT, PAYE and owed duty concerning the Black Sheep Brewery but there are “insufficient funds” to distribute to such claimants. HMRC is expected to lose up to a further £1.6million from other parts of the Keystone Group operations.

FRP Advisory also reported Black Sheep’s trade creditors are owed over £2.2million, with sister operations owing trade creditors a further £745,000.

The report said: “It is currently anticipated that there will be insufficient funds to distribute to unsecured creditors in the administration.”

In the six months to September 30 2025, FRP Advisory continued, Black Sheep Brewery made a net loss of nearly £2.7million on sales of £8.7 million, with the overall Keystone Group losing £3.4million on sales of £13.9 million.

Their report said Keystone employed 150 staff and after the group was created in 2023 it restructured aiming to consolidate the brands “into a scalable and sustainable group.” This included modernisation of and higher capacity at the Masham.

However: “Following the Group’s restructure, a combination of persistent cost inflation, margin erosion driven by sales mix and suppressed consumer demand continued to adversely impact on thee financial performance of the group.”

The report continued: “Further cash injections of £3.75 million were made by shareholders in 2025, of which £1.5million was introduced in September 2025, in anticipation of a seasonal sales uplift over the autumn/winter period.

“Unfortunately, the seasonal sales uplift did not materialise.

“Despite shareholder investment and restructuring efforts, the Group experienced a severe cash shortfall, with a projected deficit of c£2million, making continued trading unsustainable without further support.”

FRP, it said, were engaged in November “In light of the upcoming cash shortfall and imminent threat of creditor action.” The administrator prepared for an accelerated sale and filed a Notice of Intention to enter administration on November 28 “to protect thee Group against creditor action.”

By December 12, seven offers had been received, but one was to keep it as a going concern. The six others were “for certain assets on a piecemeal basis, all of which presented a worst outcome when compared to the offer as a going concern.”

The report added the sale transaction was completed on January 22. The purchaser, the Saltaire Brewery, was “not a connected party and was independently advised.”