Nant Distilling goes into receivership
Tasmania's Nant Distilling has gone into receivership. The news follows its sale falling through amid revelations that more than 700 barrels sold to investors by Nant Distilling "have never been filled with whisky."
Finance company Eclipx Commercial has appointed FTI Consulting as receivers to protect its assets - Eclipx holds an estimated $2.5million of outstanding loans to Nant Distilling secured by stills and other distilling equipment
FTI Consulting said it would move all Nant whisky barrels and their contents to a secure bond store while their ownership is determined.
A spokesman for FTI Consulting said: "The appointment follows the ongoing dispute between Nant and Australian Whisky Holdings, and has been made in order to secure the commercial interests of Elcipx Commercial.
"It is too early to say what the status of the assets is, and the receivers are not in a position to make any definitive statements about ownership at this stage."
Sale to AWH fell through last week
Australian Whiskey Holdings (AWH) conditionally agreed to buy Nant last year and take on its $5.5m worth of debts and liabilities. However, while it finalised the purchase of the Nant Estate in Tasmania's central highlands on February 17, a deal to buy the Nant distillery business fell through.
The business had been funded by an unorthodox barrel investment scheme: owner Keith Batt offered investors the chance to buy two barrels of whisky for $25,000 with a guarantee to buy it back at maturation, for $36,007 (an attractive 9.55% return on investment). During the four years of maturation, the barrels were to be stored in Nant's bonded warehouse, with each barrel numbered for the investor.
However, AWH undertook a forensic investigation of 1600 whisky barrels at the distillery and found "serious anomalies".
Australian Whisky CEO Chris Malcolm wrote to investors saying: "There are a large quantity of barrels which have been decanted, bottled and the proceeds sold however the barrel investors have not been informed or paid.
"There is a large number of barrels that are filled with approximately 45% ABV [alcohol by volume] alcohol, new-make whisky, whereas the industry standard is usually 63.4%.
"There was a significant quantity of barrels that had the owners' names and barrel numbers sanded off the barrels (we do not understand the reason for this)."
Also, a number have been leaking and not repaired.
Malcolm said he had to tell one barrel owner that his barrels did not exist: “You can imagine how difficult this phone call was for both of us. There are many more of these conversations unfortunately yet to come.”
The Nant Distilling Company Facebook page subsequently posted a letter to investors saying it had terminated the deal with AWH due to concerns Nant investors would not be prioritised.
"The Nant arrangement we entered with you, may not be as equal importance to AWH and the relationship they may have with you," the letter said. "It is our intention to recommence the redemption of barrels and our bottling and dispatch operations."
What does it mean for the Nant whisky brand?
Australian Whisky Holdings issued a news release through the Australian Stock Exchange yesterday, stating it was open to negotiating with secured creditors to buy the distillery’s equipment and trademarks. The company said plans to “commission alternative plant and equipment” for its operations should it be unable to work out an agreement with Nant’s secured creditors.
It also stated: "AWY may have to to make a commercial decision on whether it continues to use the 'Nant' brand in its trading activities (which will include an assessment of legacy issues associated with the brand."
Meanwhile, a Facebook group created by barrel investors, noted that “the contents of the barrels belong to us, the investors.”
FTI's Quentin Olde told Whisky Cast: “We understand that the Company was in possession of whiskey stock some of which is subject to a variety of barrel investment offerings entered into with various barrel investors and various Nant related entities prior to our appointment.
"It is the Receivers and Managers intention to endeavour to secure all of the barrels in the Company’s possession in order to protect it from any risk of immediate loss or sale or use by unauthorised parties. Once secure the Receivers and Managers plan on undertaking a process to accurately determine the respective ownership and other interests both in the barrels and their contents.
"The Receivers and Managers will not deal with the investor stock without notifying and making arrangements and obtaining consent of the respective barrel investor.
"Given the ongoing dispute between AWH and Nant the Receivers and Mangers consider it is essential to secure the assets of the Company and the Investor Stock to ensure all creditors, owners and investors interests are protected whilst a proper investigation can be completed.”
Staff owed wages at Nant whisky bar
Nant's Melbourne CBD whisky bar has also been closed for 10 days, with staff refusing to work until they are paid outstanding wages.
The whisky bar is a separate entity from the Nant Distilling, but is part of the same group of companies.
Some staff told ABC News they were owed thousands of dollars more in superannuation and other entitlements.
Staff sent a joint letter to management saying: "We as a team are committed to the success and growth of our venue and the company as a whole, and every one of us wants to stay with Nant given the opportunity.
"However, missing pays, failure of communication from management and the negative reputation and ongoing public silence from the company is seriously testing our staying power.
"We cannot continue to strive to achieve the future we see for this bar if we perceive no support from management, and feel our basic entitlements, such as regular pay ... are not being honoured."