As craft beer–industry shock waves go, it was a big one: Last December, Canadian equipment manufacturers Newlands Systems and Diversified Metal Engineering (DME) went out of business. These longtime manufacturers—merged together about 2 years ago under venture-capital company Clearspring Capital Partners—went into receivership after failing to make loan payments to the Royal Bank of Canada. The estimated amount owed to the bank and other creditors was almost $30 million.
The sudden closure left a couple of hundred employees out of work. It also left about 120 shocked craft brewers (both large and small) without equipment they had partially or fully paid for already, and those same craft brewers were left with little recourse. No warning signs were apparent, and brewers had little reason to worry then that DME would not deliver.
“We had been buying equipment from DME for more than five years,” says Rob Burns, founder of Boston’s Night Shift Brewing. “Nearly everything in the brewery was built by them. So, we had little reason to think things weren’t okay.”