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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Standard Web Affiliate Programs Illegal For Wine in California
The web’s near-ubiquitous affiliate programs, such as those offered by Amazon Associates, are illegal in California for wineries and retailers as well as bloggers and websites, according to information issued today by the state Department of Alcoholic Beverage Control.
The ABC’s opinion came as the result of a query made by Wine Industry Insight on August 13.
STANDARD AFFILIATE PROGRAMS OFFER A PERCENTAGE OF PURCHASE
Affiliate programs like Amazon Associates, are distinguished from standard advertising by offering the affiliate site a percentage of the purchases made by customers who arrive at the merchant side by clicking on a link or banner from the affiliate. Amazon, for example, offers affiliates up to 15% on purchases, although four to five percent is most common.
Anyone — blogger, web site owner etc. — can join Amazon’s affiliate system, and put a banner (or similar) advertisement on the site. Then, if a viewer clicks on the ad, goes to Amazon and buys a book (or any of the other items sold), the affiliate receives a small percentage of the sale.
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- ABC TRADE ENFORCEMENT SAYS PROFIT SHARE IS ILLEGAL
- INVESTIGATIONS NOT “MADE IN A VACUUM”
- OPINION HOLDS FOR ALL CALIFORNIA ABC LICENSEES
- CONSISTENT WITH JUNE 2009 OPINION
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Posted by
lperdue
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You fail to mention the biggest wine affiliate program out there: http://www.wine.com/promos/linkshare.asp
It is also very laudable of you to single handedly get the ABC to issue further opinions that will constrain innovation in the wine industry.
It’s not the question that poses the problem. But the answer. When dealing with the ABC, you might be better to ask for permission than for forgiveness.
Does Amazon offer wine in this way? I’m not aware they do.
On the larger topic of middleman sales I believe we’ve worked out a safe harbor solution consistent with the court ruling: charge the consumer or third party wine club member a fee for procurring the wines which they purchase directly at a discount.
So does that mean affiliate programs like The Wine Spies, Wine Legacy and Wine-Searcher are now illegal?
I am SO not the person to ask. Only the ABC can make the definitive determination.
Well, there goes my dream of riches once Amazon Wine *finally* launches (whenever that might be - any news, Mr. Perdue?).
Since the opinion itself is public information, courtesy of our taxes, can you provide a link or a copy?
Is your response from CA ABC a clarification of
http://www.abc.ca.gov/trade/Advisory-Third%20Party.pdf
or a completely new advisory (which has yet to appear on their site)?
A full copy is in Wine Industry Insight’s premium subscription section
A specific clarification