Toronto craft brewer out a possible $800K after supplier gets in financial trouble

A popular craft brewery in Toronto's west-end could be out $800,000 after the company supplying their machinery ran into financial trouble.

"There was a lot of shock. There's a lot of fear," said Jason Fisher, owner of the Indie Ale House in The Junction neighbourhood.

He describes getting "a really bad phone call late last Monday." That was the moment he found out Diversified Metal Engineering (DME) in Charlottetown, P.E.I. was put in receivership after defaulting on payments to the Royal Bank of Canada.

DME created many different products, mostly in the craft brewing industry. DME Brewing Solutions shipped to 800 breweries in 67 countries and has factories in China and India. 

Earlier this year, CBC News reported that the company employed about 165 people in Charlottetown, 150 in Abbotsford, B.C., and about 20 in South Carolina. The South Carolina operation is not included in the receivership. 

Fisher had already made three of four payments on new equipment for a planned expansion to his business.

"Eight hundred thousand dollars is, you know, five or six years of revenue for us; we don't have that lying around," he told CBC Toronto.

Indie Ale House, which currently supplies beer to a handful of local buyers, has a lease on a new production facility in Etobicoke in order to expand their reach to include selling cans and kegs in bulk including to the LCBO.

The equipment they bought from DME included a four-vessel, 30-barrel brewing system and parts for canning and kegging lines.

"It doesn't look like we're going to end up with our brand new Canadian-made, shiny equipment," Fisher sighed.

Other brewers have offered to help out with used parts so they can "cobble something together," he explained.

Recouping costs an uphill battle

The question is: can the craft brewer get its money back?

Frank Bennett, a Toronto-based bankruptcy lawyer, says recouping his investment will be an uphill battle.

"Inevitably, when a bank puts in a receiver, chances are that inventory is low, the equipment is low and therefore there's not a lot of goods available," Bennett told CBC Toronto.

Last Tuesday, DME's receiver said it plans to sell the business with the hope of finding a buyer to reopen the company, and that it would be calling some workers back to complete projects.

"At this time, the creditor should be filing a claim as soon as possible with the receiver, and find out if equipment has been made, or was in the process of being made," Bennett warned.

But Fisher isn't holding his breath.

"We don't want to put it on hold," he said.

We have the space. We've bought a lot of the supporting equipment, we've even started to hire some people," he said of his plans for the new production facility.

"We're going to have to figure something out."