“Hopefully, this will be a positive end to the story for everyone”, said the co-founder of Blackwater Distillery after a rescue plan was approved following a meeting of the company’s creditors with a process adviser at the start of April.
Nearly 95 per cent of the company’s unsecured debt was written off, a sum of more than €500,000, and extended the repayment periods of other debts, stabilising the Waterford-based whiskey and gin distillery.
The company had originally looked to trade through its debts, but that plan was disrupted by the “oncoming headwinds” of uncertainty in the Irish drinks market caused by US tariffs and the impact of the cost-of-living crisis.
“We also had just got through Covid, Ukraine and the huge effect they had on our supply lines and on the costs of raw materials – prices went up and up and up,” said Peter Mulryan, co-founder and chief executive of Blackwater Distillery.
“You come to a point where you go: ‘Right, well it doesn’t look like trading through this is going to be an option, so, what are our options?’ That’s where Scarp came in.”
The Small Company Administrative Rescue Process (Scarp) is a rescue mechanism for smaller Irish businesses. With just 10 employees and a turnover far below the maximum annual turnover of €12 million, Blackwater Distillery qualified for the process and were found to have a viable business model.
The distillery was founded in 2014. “For the first five or six years the market was pretty buoyant because the gin industry was booming,” Mr Mulryan said. During this time, the company looked to expand into the whiskey industry.
Unlike gin, which has a short production time, getting whiskey to market can take “at least three years but usually four or five or six years”.
“We were moving from being a predominantly gin company to being a predominantly whiskey company, pretty much at the same time as the gin market softened,” he said, noting that cash flows from the company’s gin businesses ended up being below its projections.
Mr Mulryan explained that the business became “weighed down by the burden of debt” as it tried to trade its way out of trouble, eventually that was no longer possible. “Every month, more and more was going out the door to service debt and it got to a point where it became unsustainable.”
A process adviser was appointed, Joe Walsh Accountants, and a rescue plan was put in place for the business following a majority vote of its creditors at the start of April.
“The company’s unsecured debt was largely written off,” the distillery’s chief executive said, explaining the sum was about €500,000 – “mostly bank debts”.
Mr Mulryan said entering the process “is not something anyone wants to do”, noting he and his co-founder Caroline Senior are planning to “rebuild the relationships” with the businesses that had to take write-offs.
Looking forward, Mr Mulryan noted the difficulties facing the drinks industry in Ireland, pointing to the receivership at the nearby Waterford Distillery in November and the recent examinership at Killarney Brewing and Distilling Company.
The difficulties are even impacting the larger players in the industry too, he said, with “many of the big multinational distilleries” stopping production temporarily. “So that gives you a sense of just how uncertain the future is.”
Despite the unpredictable market, Peter Mulryan is “absolutely hopeful” that his business can thrive again. “There’s plenty of good news for us, and plenty of challenges – but there are always challenges in business!”
