Tapped out: What went wrong for Killarney Brewing and Distilling?
The business, which was appointed a liquidator this week, had diversified over time to offer craft brewing and whiskey production, as well as hospitality and tourism offerings.
The brewery had been trading since 2015, after garnering strong interest from Irish-American investors to create something new and sellable to the US market.
But a challenging few years, underpinned by the pandemic and significant overspends, led to a pile-up of debts that could not be paid, ultimately resulting in the collapse of the multimillion-euro enterprise.
Among the list of creditors mentioned in court filings are individual investors and local small businesses, with amounts owed ranging from €147 to over €823,000, the effects of which will be felt from Killarney to across the Atlantic in Illinois.
The Killarney Brewery began its story in August 2013, when it was founded by Paul Sheehan, Tim O'Donoghue, and Liam Healy, who set out to develop a craft brewery and restaurant in Killarney.
The three founders all had deep ties to the US, with Mr Sheehan and Mr O'Donoghue having both lived and worked in Chicago for more than a decade, while Mr Healy resided there full time.
The trio set out to raise funds in the US for the ambitious project. They ultimately raised €1.2m, which was used to renovate the property they had leased on Muckross Rd in Killarney.
The company commenced trading in 2015 and, just three years later, had already begun formulating an expansion plan to create a larger brewery, distillery, and visitor experience.
To achieve this, the company purchased a site spanning over four acres at Killalee in Fossa. It then set about raising additional funds using its network of US investors.
The successful funding round saw the group raise more than €12m, commencing construction in 2019. A further €6m was raised throughout 2020 and 2021 through EII schemes, an Irish tax relief scheme for investors who fund qualifying Irish SMEs.
In addition, the company also anticipated preselling 1,000 casks of whiskey that it said would have yielded up to €7m.
While it secured ample funding from a diversified pool of investors, the construction phase was heavily disrupted by the pandemic. Related costs soared by 36%.
This was compounded by the company's limited trading ability due to lockdown restrictions.
The total overspend on construction rose to €8m, impacting the company's profitability and cashflow, High Court documents show.
This led to the business having a limited ability to promote and sell the intended presale of 1,000 casks, which added to its cashflow challenges.
To offset pandemic overspends, the group borrowed some €4.4m from a number of sources in late 2022.
Killarney Brewing & Distillery Company, Fossa, Killarney. Picture: Don MacMonagle
The new Fossa facility eventually opened around the same time, with the distillery commencing operations around 12 months later in late 2023.
Around this time, the group went back to the market to raise a 'Series C' €7m in additional capital to repay debts, launch and market its whiskey product in the US, and provide working capital to secure future profitability.
The group also anticipated raising a further €4m through the EII scheme.
THE 'Series C' funding round proved to be more challenging than anticipated, with just €3.5m being raised.
Complications also arose with investments through the EII scheme, which the company said were a result of changes to the government scheme in 2024.
At the end of last year, the company's cumulative trading losses had grown to almost €2m, according to High Court documents.
The company also had liabilities in excess of assets of €3.27m at the end of last year, which made it balance sheet insolvent.
Between 2020 and 2024, it incurred cumulative trading losses of €3.35m.
It was also cashflow insolvent and not in a position to discharge related outstanding loans.
The group entered discussions with potential investors in 2024, which were unsuccessful.
In January of this year, the group attempted to strike a deal with a US-based private equity investor group. This would have potentially seen an injection of up to €15m in the company.
However, rapid changes in the global trade climate and a rising threat of tariffs led to one of the parties involved dropping out of the process in early April, causing the group to ultimately withdraw its investment intent in the immediate short term.
On April 17, an interim examiner was appointed to the company.
At that time, the business had dozens of creditors and owed more than €8m. Included in the list of creditors of the brewing company were Kerry County Council, which was owed an outstanding amount of just over €108,000, and the Revenue Commissioners, who were owed €143,400.
But the repercussions extend far beyond just government bodies, with High Court filings of creditors showing the sizeable human cost felt by the brewery's financial challenges.
It also had an outstanding loan with Bailmo Limited, which held an all-assets debenture of the company, totalling almost €2.9m at the end of March this year.
On Tuesday, the Killarney Brewing and Distilling Company the unsuccessful conclusion of its examinership process. The High Court appointing James Anderson, of Deloitte, as a liquidator over the company. More than 50 jobs will be lost as a result.
In its last public statement, the company said: 'Like many in the drinks manufacturing industry, KBD has faced significant and sustained challenges in recent years, stemming from the lasting effects of the pandemic, delays in opening our state-of-the-art distillery in Fossa, global supply chain disruptions, rising input costs, and ongoing geopolitical and trading pressures.
'More recently, high tariffs on Irish whiskey exports to the US and wider economic uncertainty have further impacted the business. The company would like to express its sincere and heartfelt thanks to our exceptional employees, whose dedication, resilience, and passion never wavered throughout this incredibly difficult time.
'We are also deeply grateful to our shareholders and wider investment community for their support and belief in our vision, and to our loyal customers, partners, and the local community in Killarney who have stood by us at every turn.
'We remain proud of what we've built together and the craft, care, and creativity that defined our journey.'
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Killarney brewing company collapse: covid cost overruns and whiskey tariffs blamed
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