Bryant Family Vineyards -- one of the most expensive
Napa Valley "cult" wineries -- may be experiencing financial problems according to a complaint filed in a U.S. District Court for the Southern District of New York. The winery is one of the original cult wines to emerge during the early 1990s, along with wineries such as Screaming Eagle, Harlan Estate, and Colgin.
The complaint, filed by New York-based financial consultant Lauren Ridenhour over $400,000 in unpaid compensation, details how the winery's asset value and net annual income appear to have dropped by 40 to 50% since 2015.
In addition, Ridenhour's complaint also charges that she was fired when she refused winery CEO Bettina Bryant's demand to file overstated financial statements in the course of renegotiating a nearly $100 million loan to winery founder Donald L. Bryant Jr. That loan -- whose term ended in April -- is secured by his art collection. That collection, according to the complaint, may be worth more than $300 million.
Lawsuit "fictitious and otherwise meritless”
According to the law firm of Browne George Ross who is representing Bryant, "Ms. Ridenhour is a disgruntled ex-employee of the winery who was dismissed. Her lawsuit – which we fully expect will be subject to an early dismissal – is based on allegations and premises that will be shown to be fictitious and otherwise meritless.”
Ridenhour declined comment for this article. "I think the facts as expressed in my legal documents make a compelling case,” she told Wine Industry Insight.
Ridenhour is a private wealth management consultant formerly with U.S. Trust/BofA Private Wealth Management, J.P. Morgan/Chase Private Bank and other financial institutions. Her specialty is helping very high net worth individuals and family operations manage banking relationships.
Complaint details prior successful work for Bryant Family Vineyards
According to the complaint, Mrs. Bryant originally retained Ridenhour in 2014 at $150,000 per year to work with Bryant Vineyards Ltd. -- the owner of the winery. Subsequently, during the summer of 2015, Bryant also engaged Ridenhour to negotiate a $100 million loan on behalf of the Donald L. Bryant Art Trust which owns an extensive private collection including works by Picasso, de Kooning, Giacometti, Rauschenberg and other big names.
The Trust agreed to pay Ridenhour 20% of any interest savings. A court exhibit to Ridenhour's complaint detailed how her nine-month-long negotiations with J.P. Morgan/Chase (JPMC) resulted in interest savings to Bryant of $3,274,290 in interest.
The trust did not pay the agreed-upon 20% commission, but instead settled with Ridenhour for $400,000.
The 2018 Financing Raised New Lending Requirements
Because the 2015 loan was due in April, 2019, Bryant engaged Ridenhour at the end of May 2018 to negotiate a refinancing at the same $400,000 fee received for the original loan. Ridenhour was still separately employed by the winery during this time. While a number of other banks were contacted, the focus returned to JPMC, according to the complaint.
Significantly, in the intervening three years, lending conditions overall had changed to banking requirements that demanded cash flow requirements in addition to the value of assets.
As a result, the complaint noted that "JPMC required extensive information and documentation to renew the loan, including a detailed analysis of the Bryants' personal financial assets."
While not stated directly in the complaint, Donald Bryant had been diagnosed with Alzheimer's Disease and had been replaced by Bettina Bryant as a trustee of the Art Trust. She was also appointed President at the winery in 2014.
Complaint Alleges Inaccurate Financials Inflated Income & Asset Value of Winery and Mr. Bryant
According to Ridenhour's complaint, "On or about June 20, Mrs. Ridenhour reviewed the Bryants' draft personal financial statement ("PFS"), that they intended to submit to JPMC." Key among the issues that Ridenhour raised was the accuracy of Mr. Bryant's income and the asset value of the winery.
" [T]he Bryants represented the Winery's valuation at an exceedingly generous $125 million," states the complaint. "The valuation was 25% above the prior valuation of $100 million stated in the personal financial statement provided only nine months earlier."
"However, this valuation was inaccurate, as the Winery suffered from excessive back inventory as of July 2018 of over $14 million in prior vintages and an approximate 40% decline in sales over the last three years. Mrs. Ridenhour's valuation research revealed no previous valuations, based on the books of the Winery, able to support anywhere near either the $100 million valuation offered in 2017 or the $125 million valuation provided in 2018."
International Wine Associates Concurs with Ridenhour on 30-40% Drop in Winery Valuation
The complaint said that, on Oct. 26, 2018, "a representative of International Wine Associates ("IWA"), which represented the Donald L Bryant, Jr., Revocable Trust, stated in a conference call on Friday, October 26, that IWA was projecting their final valuation of the Winery to be significantly lower than $100 million, possibly 30 to 40% lower (i.e. $60 - $70 million).
"During this conference call," the complaint continued, "Mrs. Bryant became angry, denying that the $125 million valuation amount was incorrect. Mrs. Bryant demanded that IWA show very high sales numbers projections for the 2019 vintage. This was the last phone conversation Mrs. Ridenhour had with Mrs. Bryant."
Ridenhour's complaint further alleges that, "Upon information and belief, based on Mrs. Bryant's statements," Mrs. Bryant then insisted that IWA show extremely unlikely increased growth projections for the January 2019 release for the Winery."
It is unknown if IWA followed Mrs. Bryant's demands. Wine Industry Insight reached out to IWA for comment, but has not received a reply.
Winery Net Income Overstatement Failed to Deduct Expenses
In addition to the issue of overall asset value, Ridenhour's complaint states that the signed Personal Financial Statement (PFS) sent to the bank is also too high: "A majority of the annual income reflected on the 2018 JPMorgan PFS is income from the Winery, without the deduction of expenses. That resulted in the total annual income being overstated by approximately 40% to 50%, because Winery expenses were not included."
Alleged Overstated Asset and Income Values Sent to Bank
Regardless of the controversy, Ridenhour's complaint states that the allegedly overstated $125 million valuation was sent to the bank: "On June 29, Mrs. Bryant's personal assistant emailed (with a copy to Ms. Ridenhour and others) a draft PFS to JPMC representing the Winery valuation to be $125 million."
Ridenhour raises financial problems with the Trust
Ridenhour's complaint says that she expressed her concerns multiple times to the Trustees and their attorney about the financial statements sent by Bryant to the bank.
At a Sept. 10, 2018 meeting with the board of Trustees, the complaint stated that Ridenhour, "expressed her view that Mrs. Bryant's personal financial statement was misleading and would need to be corrected for JPMC as well as for any other bank that she may approach. At that meeting, Ridenhour went over line by line with all attendees why the income represented was not correct on the 2018 and 2017 signed PFS submitted by the Bryants to JPMC."
Winery Financials Indicate Significant Drop in Sales
According to Ridenhour's complaint, "The just finalized 2017 Winery financials [presented at the Sept. 10, 2018 meeting] showed the net income of the Winery at $2.5 million, while the signed 2018 PFS showed the 2018 Winery income projection between $6 to $7 million," said the complaint.
"However, because of added expenses and decreasing mailing list sales, the estimated 2018 net income of the Winery was expected to be less than the $2.5 million 2017 number and likely closer to $1.8 million- significantly less than the $6-$7 million amount the Bryants reported to JPMC."
Bettina Bryant Terminates Ridenhour for Questioning Financial Statement Accuracy
On Nov. 3, 2018, On November 3, Bryant sent an email to Ms. Ridenhour terminating her winery employment and her consulting work on loan negotiation.
Ridenhour's complaint states that: " The Winery paid Ms. Ridenhour's salary and benefits for her work at the Winery through the end of 2018. Mrs. Bryant made no payment for Ms. Ridenhour's services in connection with the loan negotiations for which Ms. Ridenhour had done substantial work, similar to the work that she had done in connection with the prior loan for which she had received a $400,000 fee.
"Upon information and belief," the complaint concluded, "Mrs. Bryant terminated Ms. Ridenhour's services because Ms. Ridenhour questioned the validity of Mrs. Bryant's financial representations to JPMC and refused to provide inaccurate financial information to JPMC, denying Ms. Ridenhour the compensation that she had earned."
Full complaint filing available
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