Negotiations with landlords over future of four Black Sheep pubs in Yorkshire following administration deal

But negotiations are now required for the leases of the pubs to be transferred to the new ownership on a longer-term basis.

Black Sheep’s two pre-existing business arms – Black Sheep Brewery Plc and BSB Retail Limited – now fall under a new company owned by Breal called Black Sheep Brewing Company Ltd.

The leasehold pubs, which fell under the retail arm of the previous business, are The Three Legged Mare and The Last Drop Inn in York and the Leeds-based Black Sheep Tap and Kitchen, as well as Mr Foley’s Cask Ale House.

In the report by administrators Teneo, it said: “We granted the purchaser a three-month licence to occupy each of the four pubs while the purchaser enters into negotiations with the landlords in relation to reassigning the leases.

"On completion of the transaction, the purchaser paid a licence to occupy fee of £55,000 plus VAT in relation to rent, service charge and insurance costs for the period of occupation, which is payable by the administrators to the respective landlords on the due dates previously in place."

The sale of the Masham-based Black Sheep followed the company making a series of losses which have been blamed on a combination of the pandemic and rising costs caused by inflation.

The deal with Breal saved around 140 jobs and secured the future of the business after the company made a £1.6m loss in 2022/23 and took on increasing amounts of debt.

But it means taxpayers and almost 400 creditors are set to collectively lose out on millions of pounds they are owed.

Around £6m is owed – much of which is unlikely to ever be repaid.

In August 2020, it took out a £3.125m Coronavirus Business Interruption Loan Scheme (CBILS) and in July 2022, took out a further £1.6m from the Recovery Loan Scheme (RLS) initiative.

The report reveals that £2.5m of the CBILS loan and all £1.6m of the RLS loan remained outstanding at the time of administration. As part of the sale a further £373,000 has been repaid to lender Close, leaving around £3.7m outstanding. The report said that “whilst further distributions will be made, Close will not be repaid in full”.

Both loans are backed by the Government, meaning 80 per cent of the outstanding CBILS money and 70 per cent of the RLS loan will be covered by the state.

HMRC is also owed £1.2m from the brewery side of the business and £135,000 from the retail pub side. The report said the £135,000 is not set to be repaid and the £1.2m is unlikely to be repaid in full.

A total of 376 unsecured creditors are collectively owed £1.4m – money that will not be returned.

There will also be no return of money to a company called Dewscope, which provided £500,000 in loan notes in January this year.

Around £30,000 owed to Lloyds on corporate and business cards as well as a VAT bond is not expected to be repaid.