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Pivotal Bankruptcy Court Hearing Today For Spring Mountain Vineyards

This is the redacted version of a premium article for Wine Executive News Premium Subscribers.

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Spring Mountain Vineyards faces a pivotal emergency hearing today in U.S. Bankruptcy Court for the Northern District of California, Santa Rosa Division to make its case for using secured assets to pay for continued operation.

 

The  Zoom proceeding before Judge Charles Novak  is scheduled for 8 a.m.

 

View previous Wine Industry Insight coverage of the case is available at this link.

 

As with most bankruptcies, docket items to be covered at this hearing include authorizing Spring Mountain to:

  • Maintain its bank accounts and cash management system,
  • Make payment and/or honoring of pre-petition employee compensation, benefits, reimbursements, withholding taxes, accrued vacation, and related claims
  • Pay pre-petition claims from critical vendors, and
  • Use cash collateral  for continued operation.

Tangled Financial Web

Because Spring Mountain’s initial bankruptcy filing was dramatically incomplete, the case lacks any comprehensive accounting that could be reduced to (assets) – (liabilities) = $what?

 

Instead, the case is a tortured snarl of big dollar assets, liabilities, insurance claims and payments (or alleged underpayments), seemingly unrelated assets (Encyclopedia Britannica) and myriad financial transactions that defy understanding by mere mortals (which may be the point.)

Extensive Court Filings Hold The Details

The court filings linked below, make for interesting and challenging reading because  — so far — the court record lacks a complete and well-organized picture of “who is doing what to whom, why, and how much, when?”

 

That equation may read a little less than a quantum chromodynamics blackboard equation later this month because the court ruled that Spring Mountain must file the rest of its sketchy initial bankruptcy documents by Oct., 27.

 

Also filed earlier this month was an amended list of the 20 largest unsecured creditors (premium link) which also removed  insider Constantine Yannias who, Wine Industry Insight pointed out in its initial article,  should not have been on the first filing.

What’s Worth What?

Because of the complex web of insurance claims and payments resulting from Napa Valley wildfires, the exact extent of Spring Mountain’s liabilities is pretty much unsettled and may forever remain beyond accurate human comprehension.

 

However, extensive court filings detail the value of the wine, (premium link) the real estate (premium link), and the cash flow (premium link) required for continuing operations.

The Real Estate: $204.1 Million

Table source: ECF22 – Spring Mountain Vineyards – Real Estate Appraisal – 100622 (premium link)\SpringMountainRealEstate-freeimage

The Wine – $80 Million Wholesale

Source for screenshot text below: ECF24 – Spring MountainVineyards – Ekman-  Declaration Of  Value – 102422 (premium link)

 

Screen Shot 2022-10-17 at 3.00.18 PM

 

 

Cash Flow To End Of 2022: -2.3 Million

Source: ECF19 – Spring Mountain Vineyards – Petition Authorizing Use Of Cash Collateral – 100622 (premium link)

SpringMountainCashFlow-freeimage

 



 

Full Bankruptcy Filings – Premium Links

  • ECF14 – Spring Mountain Vineyards – Amended 20 Largest Unsecured Creditors-100322
  • ECF19 – Spring Mountain Vineyards – Petition Authorizing Use Of Cash Collateral – 100622
  • ECF22 – Spring Mountain Vineyards – Real Estate Appraisal – 100622
  • ECF23 – Spring MountainVineyards – Spievack Declaration In Support Of Use Of Cash Collateral – 100422
  • ECF24 – Spring MountainVineyards – Ekman-  Declaration Of  Value – 102422
  • ECF26 – Spring Mountain Vineyards – Constantine Yannias – Declaration In Support Of Emergency Motions – 102422
  • ECF27 – Spring Mountain Vineyards – Jorge Cauz – Britannica CEO – Declaration In Support Of Emergency Motions – 102422