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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AMAZON PULLS PLUG ON WINE?
While Amazon has not officially confirmed its exit from the field of direct wine sales, numerous executives in the wine trade have received an email this afternoon, purportedly from Dini V. Rao, Amazon’s Senior Account Manager for Business Development - Wine.
Unless the email turns out to be a hoax, the unexpected exit of America’s largest online retailer leaves scores of potential Amazon partners in a lurch.
Wine Industry Insight has not been able to confirm the authenticity of the email (below), just that it has been widely sent to people involved with the Internet giant’s wine effort. WII called Rao’s direct line and the message said she would be away on vacation until Oct. 27.
WII also contacted Amazon’s flackdroids, i.e., media relations department, but was unable to determine if they have actual live people to speak to. Our voicemail had not been returned by publication time.
WHAT HAPPENED?
The collapse of New Vine Logistics, may have spelled the beginning of the end. By September, according to insiders familiar with the situation, Amazon had begun to distance itself from New Vine/Inertia Beverage Group as a fulfillment partner.
This left other fulfillment partners — who have been concentrating on their own businesses — less eager to “get into bed” with Amazon, especially since it has been seen as dragging its feet and unreasonably stringing its partners along.
At the same time, the California Alcoholic Beverage Control Commission had been applying increasing pressure on the business model. As a result, one insider said, “instead of popping the cork, they pulled the plug.”
DINI RAO’S EMAIL
From: “Rao, Dini” <dinirao@amazon.com>
Date: October 23, 2009 1:00:46 PM PDT
Subject: AmazonWine update
Dear friends of AmazonWine,
I am very sorry to let you know we have recently decided not to resume shipping. As you know, we were excited to work with you to build the AmazonWine business. For that reason, this was a very tough choice for us.
Many of you took the time and leap of faith to really support us.
Thank you so much! I am sorry that we won’t get to realize the vision on which we have collaborated. Be well and may we work together again soon.
Warm regards,
Dini
Dini V. Rao, DWS
Senior Account Manager
Business Development - Wine
Posted by
lperdue
on Oct 23rd, 2009 and filed under
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Pretty BAD!! Carol Thompson and Katie Horptkorn not only destroyed New Vine they were able to bring Amazon down too. Just think if they had the ability to actually build and manage a company. Wow and Carol still works for IBG, and Katie is now telling others how to be a CEO.