California’s Vintage Wine Estates files for bankruptcy

Vintage Wine Estates, one of California’s biggest wine companies, has filed for Chapter 11 bankruptcy and announced its intention to delist from the stock market.

After battling to pay off US$60.5 million worth of debt, Vintage Wine Estates (VWE) has filed for bankruptcy, stating that “negative financial headwinds” had “severely impacted its liquidity position”.

The wine company, which owns brands including B.R. Cohn, Girard, Clos Pegase and Viansa, has already begun offloading assets, revealing on Wednesday 24 July that it has sold the property and equipment of its Constantino Winery to Gene Wines for US$10.5 million.

Ultimately, the company said, it plans to sell “all or substantially all” of its assets and claims it has already received “multiple preliminary indications of interest” from potential buyers.

“The decision to file for the voluntary petition for reorganisation under Chapter 11 was made after a careful evaluation of the company’s financial situation and a determination that it is in the best interests of the company and its stakeholders,” VWE said in a stock exchange filing.

VWE, which went public in 2020, will now delist from the stock market while it completes a “restructuring process”. GLC Advisors & Co. LLC and GLC Securities LLC have been appointed to advise the wine company on its options.

Following the announcement, VWE stock fell 33% to 7 cents a share. However, stocks moved higher for some other California wine producers in the wake of the news, including Duckhorn Portfolio, which saw a 1% boost.

The Chapter 11 filing follows an earlier spate of redundancies made by VWE during the last 12 months, which cut its workforce by 22% in a bid to claw back costs.

Founder Pat Roney stepped down from his role as CEO in February last year, but remains on the board of directors. VWE’s current president and CEO Seth Kaufman joined the company last July from his previous role as president/CEO of Möet Hennessy North America. VWE has described Kaufman as a “transformational, people-first leader with a proven track-record of guiding teams to large-scale transformation resulting in significantly improved performance.”

In 2021, VWE spent significant sums on acquiring four businesses: Kunde Family Wines; Vinesse Wines; Sommelier Company and Ace Premium Craft Ciders.

The acquisition of Sonoma’s Kunde Family Wines was agreed for US$53.1 million on 19 April, 2021, with the transaction funded by VWE Inc’s line of credit and delay draw term loan. Two months later (in June, 2021), VWE further diversified with the purchase of Sommelier Company, which conducts virtual and in-person events with certified sommeliers. Then in September, 2021, the Vinesse Wines acquisition was completed for US$14 million.

VWE’s portfolio includes wineries based in Napa, Sonoma, California’s Central Coast, Oregon and Washington State. Among its brands are: Kunde Family Wines; Laetitia Vineyard & Winery; Layer Cake Wines; Delexus; Buried Cane; Firesteed, and many more.