While prospects for insolvency have captured the attention of those following the W. J. Deutsch's lawsuit against Ascentia Wine Estates (AWE), the process has unleashed a series of  corporate mismanagement allegations against  CEO Jim DeBonis.

"Eight Estates [a former name for AWE] may or may not be insolvent in a purely technical sense," said one source associated with the process. "But there is no denying that it has serious sales and financial problems, most of which result from executive mismanagement. That said, the company's only way out of its financial jam may be to file Chapter 11 in order to force debtors to restructure its debt."

That source, along with 17 others interviewed by Wine Industry Insight, spoke only upon a guarantee of confidentiality, some because they were not authorized to speak with the media and others fearful of  "blowback."

"This is messy and going to get a lot messier before it's over," explained one source. "There will be collateral damage. People are going to get shot in the crossfire."

ALL SOURCES GIVEN OPPORTUNITY TO CORRECT & COMMENT

On Sunday evening, Wine Industry Insight emailed a draft of this article to DeBonis, Peter Deutsch and to all sources requesting corrections and additions by noon Monday. While not a standard WII practice, the shortcomings inherent in articles that rely heavily on unnamed sources demand an extra effort to insure a fair, accurate, complete and contextually accurate article.

Information from anonymous sources is never used by Wine Industry Insider unless it is corroborated by legitimate documents or by two or more independent sources.

Neither Deutsch nor anyone from his organization had any comment.

An email from DeBonis read, "Thanks for the opportunity, you definitely have your facts all wrong. I cannot get back to you by noon, but I will later on."

WIN had not received anything from DeBonis by 4:30 p.m. when this article was sent to subscribers,

In addition to its sources, Wine Industry Insight also relied upon W. J. Deutsch's legal complaint filed in Delaware Chancery Court.

DEUTSCH RAN OUT OF PATIENCE, FILED SUIT

"Bill Deutsch got tired of being ignored," said a source familiar with the controversy. "He felt stonewalled, lied to and believed that his legitimate concerns had been ignored. But you have to remember that he's also in litigation with another investment, Renwood Winery. I think he pulled the legal trigger so quickly on this one because he felt his patience with Renwood had been taken advantage of and he was not going to let that happen again."

"Even though WJD has a 27-percent interest, the rest is in the hands of Jim's allies, with GESD holding a whopping majority," said the source.

Ascentia acquired eight orphan Constellation Brands in June of 2008 as part of the $208,770,900 million deal that created AWE.

In that deal, all of AWE's land and wineries were acquired for $115 million by SBV VinREIT, an LLC operated by Kansas-City-based, Entertainment Properties Trust (NYSE:EPR). All the wineries and vineyards were then leased back to Ascentia.

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Also In This Article:

The full text of the following sections is available to VIP Premium Subscribers).
  • GESD PROVIDED BULK OF FUNDING, GOT HEFTY FEES
  • GIRAUDO ONLY INVESTOR NOT SUED
  • AGREEMENT KEPT DEUTSCH FROM PROPER DUE DILIGENCE
  • IMPOSSIBLE FOR ASCENTIA TO MAINTAIN PREVIOUS SALES LEVELS
  • DEBONIS SHOULD HAVE KNOWN ABOUT "INFLATED FINANCIAL PROJECTIONS"
  • GESD THREATENED TO SUE IF DEUTSCH INVESTIGATED
  • MEDIA GIVEN WILDLY CONFLICTING ASCENTIA SALES FIGURES
  • ASCENTIA: NO STRATEGIC PLAN + INABILITY TO MOVE QUICKLY
  • DEBONIS NO "FREDDIE FRANZIA"
  • FINANCIAL WOES PROMPTED ATTEMPT TO SELL BUENA VISTA WINERY
  • VINREIT NIXED BUENA VISTA SALE
  • BUENA VISTA "LAME" BRAND HURT POTENTIAL SALE
  • BUENA VISTA NOW MOTHBALLED, HOPING FOR CUSTOM CRUSH
  • BARGAIN BASEMENT SALES OF WINE TO INVESTORS & INSIDERS PROVIDED STOPGAP CASH, DEPLETIONS
  • ASCENTIA TOO "BIG CORPORATE" FOR OWN GOOD
  • TOP EXECS FAILED TO HALT "TOXIC ENVIRONMENT"

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How Journalism Works At Wine Industry Insight

Here’s how an article works.

I hear about something that may be news. I learn about these through public documents, emailed and phoned tips, or sometimes by putting two-and-two together and looking around the right territory.

CONTACT MADE WITH EVERY POSSIBLE SOURCE

Then I contact everyone possible. This includes the people directly in the news and others who are in a credible position to have solid information. I ask those people for the names of other sources as well as for documents that have a bearing.

In contacting people, I use email, phone and especially personal cell phones which are the most likely to avoid time wasting barriers.

A lot of the time, people who would rather not talk about something simply do not call back. No one from Cosentino, for example, has ever returned a call or an email.

NEWS, UNLIKE WINE, DOES NOT IMPROVE WITH AGE

Unlike a magazine which has weeks and months to write an article, or a newspaper which may take days, an Internet publication like Wine Industry Insight works with the same sort of deadlines as television or radio — hours.

The goal is to report news before it becomes history. Because news, unlike wine, rarely improves with age. And fortunately, the Internet allows speed updates, corrections and additions when new information becomes available.

UPDATES AND CORRECTIONS MADE QUICKLY

Am I always right? Of course not!

That’s why I correct errors and issue updates and follow-ups as soon as I get the information.

Of course, people contacted for an article do not sit anxiously by their phones and emails waiting for me to write or to call. Some unreturned calls — or those returned late — have many innocent and very logical explanations.

Regardless, I’m always ready to update or correct an article as soon as possible.

UNRETURNED CALLS & EMAILS SOMETIMES HAVE ULTERIOR MOTIVES

In the decades that I have worked as a journalist, author and investigative reporter covering everything from the White House to Congress and from city courts to the Supreme Court, I’ve learned that many times people do not call back because they think it will prevent a negative story from being published.

It also gives them time to leak selective details to a more friendly reporter in hopes of sandbagging a more accurate but less-friendly story.

And it offers plenty of time to misplace documents, silence employees and to find a rug to sweep things under.

NO RESPONSE = NO ROOM FOR COMPLAINTS

Journalism is an inherently flawed process. Newsworthy events sometimes need to be based on incomplete information. This is particularly frustrating when the direct actors with the best information simply don’t respond.

Sometimes, they respond a day or two later, usually because they’ve seen an article. These folks wrap themselves in a self-righteous victimhood and expound long and hard about journalism standards and the like.

The fact is: those who fail to respond have no room to complain.

On a recent article, I left a message on the voicemail for a tremendously busy grower.  Despite the demands of crush in full swing, he took time to check his messages and returned my call. The main player in that article, who received a call and voicemail on his personal cell phone, didn’t call back until the next day.

If someone wants an article concerning them to be accurate, then they need to respond. Period. I work very, very hard to be fair, accurate , complete and in context. But that doesn’t mean I’ll sit on an article when it can be confirmed by multiple, credible and independent sources.

Posted by lperdue on Sep 7th, 2009 and filed under Featured Articles, Insight FAQs. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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