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From Editor & Publisher Lewis Perdue

January 3, 2023
 

Winc's attorneys filed a 10-document onslaught in the middle of the Christmas/New Year's holiday week seeking immediate approval from the bankruptcy judge for a wide-ranging set of  financial moves and transfers.

The court's Official Committee of Unsecured Creditors (the Committee) fired back on New Year's Eve with a pointed response that fell just slightly short of accusing Winc of improprieties designed to block the entry of new bidders and financially favor the Stalking Horse entity controlled by a Winc co-founder

According to the Unsecured Creditors Committee Filing (premium link):

"The positioning of these cases as a last-minute pivot to Chapter 11 with a secured super-priority loan from the Stalking Horse as the only financing option reinforces the Committee’s concerns that the DIP Lender has negotiated the terms of the DIP Facility to leverage its position and chill bidding,..."

The  judge in the case dismissed most of the Committee's previous objections.

According to the Committee's current filing:

"As it stands, the Court is being asked to approve a Final DIP [Debtor In Possession] Order that, in conjunction with the sale and other relief sought by the Debtor, will tilt these Chapter 11 Cases towards administrative insolvency following a process designed for the benefit of the Debtors’ founder. [emphasis added]

"The Committee seeks to explore and achieve a resolution that addresses the DIP Financing and sale terms that risk creating an administratively insolvent estate with no recoveries for unsecured creditors [emphasis added]—but until such a resolution is reached, the Committee will oppose any transactions that individually or collectively lead to such a result. Absent an adjournment, and barring agreed upon changes to the Final DIP Order, the Committee requests that the DIP application be denied."

In addition, the Committee's current filing:

• Opposed the retention of Canaccord Genuity LLC: "If approved in its current form, Canaccord’s fees will render the estate administratively insolvent."
• Demanded a verification and clarification of the Stalking Horse Terms as well as ongoing issues with the purchase agreement
• Expressed the concern that the Judge's current ruling, "funnels into the Committee’s continuing and overarching concern that these cases will be left administratively insolvent following the sale."

Previous Wine Industry Insight Articles On Winc

• Deadline Looms For Bids To Buy Winc Assets. Creditor Group Objects, Wants Postponement, Rules Changes
• Winc Lawyers File Last Minute Blizzard Of Bankruptcy Court Documents. Deadlines Moved. Other Changes Seem Minor
• Winc slashes IPO 73% after postponement, bails on “white shoe” underwriters.
• Wine Club Winc postpones $75 million IPO. A look at one number might be the key.
• Winc, Part 1: What happens if a company blows a federal court filing deadline?
• Winc, Part 2: What happens if a company blows a federal court filing deadline?
• Winc’s not-so-Netflixy customer retention rate — here’s how the math works
• Winc falls way short of being “The Netflix of Wine” when it comes to customer retention
• Winc raises $3+ million in latest offering, but fails to disclose federal court case brought against it by state of Ohio
• Winc the Netflix of wine? (Nope)
• Winc’s registered investment offering closes Friday
• Winc (Formerly Club W) comes in at #7 In WII’s Winetech funding survey

Many More Details In The Full Document Links For Premium Subscribers

• ECF100-Unsecured Creditors Objection To Final Order And Request For Adjournment - 123022.pdf
• ECF47-Omnibus Proposal For Bidding Procedures & Deadlines
• ECF47-2-Order-Winc-Proposed Bidding Procedures-120722
• ECF47-3-Order-Stalking Horse Agreement-120722.pdf
• ECF47-4-Winc - Sale Notice-120722.pdf
• ECF47-Winc - Bidding Procedures-120722.pdf
• ECF75-Objection By OFFICIAL COMMITTEE OF UNSECURED CREDITORS-122122.pdf
• ECF75-2-Creditors Committee-ExhibitB.pdf
• ECF75-3-ExhibitC-creditorscommittee.pdf
• Winc Bankruptcy - Creditormatrix.pdf
• ECF-1-ExhibitA-CreditorsCommittee.pdf

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