USA: Largest keg rental company declares bankruptcy

Global Keg, the world’s largest stainless-steel keg rental company has filed for bankruptcy. According to Bob Moore, who founded Global Keg in 2013 in Orlando, Florida, the strict measures applied earlier this year in the course of the COVID-19 pandemic, and the subsequent lockdown of bars, clubs and restaurants and cancellation of major events have forced the company to file protection under chapter 11 of the United States Bankruptcy Code.

“When the pandemic began it was assumed that the activities would be suspended for two weeks, but now almost six month have passed,” says Moore. “Bars and restaurants were the first to close,” he says. As a result, many clients went bankrupt, and kegs gathered dust in the warehouse instead of being rented out to customers. The capital-intensive business model, which is based on the continuous rental of kegs, suddenly stopped working.

A Chapter 11 bankruptcy allows reorganizing the business while the debtor remains in control of its business operations.Moore acknowledges that it will be hard to reorganize the business without easing of the pandemic in the nearest future. Only in this case it will be possible to count on the resumption of the regular sales and the attraction of the funds necessary to continue the activities of the company. "Nothing can happen until someone sells something, because sales are the beginning of a stream of income," he said.

The company currently sits on a huge pile of unused and partially unpaid kegs. Before the pandemic broke out, the company ordered thousands of kegs from nearly all of the larger kegs producers which delivered the goods but were not paid. Some are said to have millions of dollars' worth of open accounts that may be lost forever. It is also not clear how other keg rental companies that suffer the same fate can survive the next months. One has to wait and see how the industry will reposition itself after the crisis.

Global Keg was a pioneer of the keg rental business. The company offered beer kegs and plastic pallets for rent that allowed for tracking and tracing anywhere in the world with its unique SmartKeg™ technology. The company offered the kegs clean, fit-for-use and on-time after passing a 15-point inspection to be delivered at the point of use. It has expanded its own reverse logistics operations and offered SmartReturn™ reverse logistics as a stand-alone service regardless of keg ownership.Global Keg has also entered the pallet industry with international orange plastic pallets for easy identification and the same RFID SmartPallet™ asset tagging technology.

Global Keg expanded in recent years its operations from the United States to other parts in the world including Australia, Austria, Belgium, Canada, France, Italy, Japan, Netherlands, South Africa, Spain, and the United Kingdom.

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