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- Published: February 21, 2025
- Category: Latest News
Rocks Brewing Company, an independent family-owned business based in Sydney’s Alexandria, was placed into Voluntary Administration in late 2024 following a range of challenges. Rocks Brewing operated a brewery with an on-site restaurant and bar and employed between 20-30 staff depending on demand. Rocks Brewing was launched 15 years ago, and its annual revenue was about $5 million. Being placed into administration provided the breathing space for a buyer to be found.
Background
Rocks Brewing was beset by a number of challenges: the impact of Covid, rising interest rates, and cash-flow difficulties due to significant debts and reduced consumer spending as the cost-of-living crisis bit into budgets.
Solution
After being appointed as Voluntary Administrators, Jirsch Sutherland Partners Trent Devine, Andrew Spring and their team assessed the financial status of the business with a view to restructuring or possibly selling it. They ultimately decided to continue to trade, with the support of the major secured creditor, in order to market it for sale.
“With cost-of-living pressures easing, the business was well positioned to take advantage of the next market cycle, so the key focus was to deal with legacy debt and to investigate a restructure or possible sale of the unique brewery,” says Devine. “We worked closely with the Director to manage the day-to-day operations of the business during the Administration period.”
Devine adds the trade-on posted challenges due to the time of year (i.e., trading the business during the Christmas and New Year period), and there was a significant number of supplier relationships to manage. “Without the suppliers’ support we could not have continued to trade the business,” he says. “It was also vital to communicate regularly with the secured creditors to keep them up-to-date and to provide them with confidence about our ongoing trading effort and sales campaign.”
Following a targeted marketing effort, Jirsch Sutherland found a buyer – the Schwartz Family Company (SFC) – within six (6) weeks, with settlement finalised within ten (10) weeks. SFC acquired the Rocks Brewing Company, including its production facilities and restaurant/bar in Alexandria. The brewery will be incorporated into Sydney Brewery’s operations, with the brewery and restaurant re-branded as Sydney Brewery Alexandria.
“We had to secure a sale within a very tight timeframe,” Devine says. “The lead-up to Christmas was the busiest period of the year for the company, but post-Christmas a significant drop-off in performance was forecast, where the business would no longer operate profitably. Finalising the sale took place over the Christmas and New Year period, which added an extra layer of complexity as decision-makers for the stakeholders had limited availability at this time. There were strong synergies between the two businesses, and it was a great outcome.”
Dr Jerry Schwartz, SFC Director, says the acquisition of Rocks Brewing Company was a positive move for the industry. “Last year was a very difficult year for the brewing industry, but Sydney Brewery bucked the trend, and we have been urgently seeking extra capacity to produce our craft beers.
“We are ramping up production while many craft brewers are struggling to survive, and our takeover of the Rocks Brewery operation will provide an outstanding opportunity to both increase the amount of Sydney Brewery craft beers that we produce and also revive the Alexandria location as a prime brewpub, dining, entertainment and functions venue.”
Results
After the sale, employees had their entitlements paid in full and secured creditors received a better return than would have been the case if the business had ceased to trade and the assets sold at a breakup auction. All unrelated staff were retained by the purchaser.
“Saving the business and having the staff keep their jobs is a great result,” says Devine. “It’s another good example of how Voluntary Administration can be effectively used as a business-rescue solution.”