10/04/2025
🌙 Late-Night Business Exercise 🚨 How Brands End Up in Receivership
I had to take some time at night to put all the pieces of the puzzle together. I even talked it over with two of my close business colleagues as a kind of business exercise. Like I always say there are no losers in this game, only winners and lessons so keep winning and learning. Here we go, let’s dive in…
From the outside, people see bottles on shelves in 50 states and 10 countries and think: this brand must be untouchable. But the reality is, many companies get into trouble not because of lack of sales, but because of how the business deals behind the brand are structured.
Here’s how it happens:
• Distilling, bottling, and distribution contracts can eat up profits. If the deals aren’t favorable, your margins are too small to carry the business forward.
• Thin margins mean you can make $89M in sales but walk away with only $5M in profit. That doesn’t leave much room for setbacks.
• Investor capital burn even raising $230M from investors won’t save you if the money is spent faster than revenue grows.
• Heavy debt load add a $100M bank loan on top of it, with $24K in interest bleeding out every single day, and the cash drain becomes unsustainable.
• Growing faster than your customer base wide distribution looks good on paper, but if the dollars don’t catch up in time, you’re overextended.
When all of this collides, a brand can fall into default, and a court may appoint a receiver to take over and even call in a liquidation company to value and sell the assets.
✅ What Needs to Happen in Receivership
• Stay engaged don’t disappear. Show the receiver and potential buyers you are part of the brand’s value.
• Protect the story & IP in spirits, the founder’s voice and the brand story are just as valuable as the product. That must be preserved.
• Challenge undervaluations liquidation firms often price only physical assets. Push to include brand equity, trademarks, and distribution in the valuation.
• Restructure and negotiate some debt can be converted to equity, or terms reset, to keep the company alive.
• Line up buyers or allies bring in big spirits players, PE firms, or even past investors who understand the long-term value and want the founder attached.
🔄 Options on the Table
• Debt restructuring turning some debt into equity, reducing the crushing interest.
• Stalking horse bid setting a fair floor price to stop the brand from being sold off too cheaply.
• Founder’s continued role securing a position as consultant, brand ambassador, or minority owner so the culture and story don’t vanish.
• Investor regroup forming a new entity with allies to buy back the brand and relaunch on stronger footing.
💡 My Closing Thought
Receivership doesn’t mean the brand has failed. It means the financial alignment wasn’t built to last. If your deals in distilling, bottling, and distribution don’t protect your margins… if $230M in investor money and $100M in bank debt are burned without discipline… if you grow wider than your income and customer base can support… even a strong brand can stumble.
The real lesson?
Build strong, but build balanced. Protect your margins, structure your deals wisely, and grow in rhythm with your customers.
There’s no defeat in this only the chance to learn, adjust, and come back stronger.
This isn’t theory it’s the real playbook check some of the things in my ebook
If you’re serious about building your own label, this is your first step in ‘ The Spirits of Success’ Master Class ‘ to your success.
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