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Court helps area winery

A pair of rulings in U.S. Bankruptcy Court in Sacramento have given Indian Springs Vineyards of Penn Valley some breathing room while it works out a reorganization plan that will satisfy its creditors.

Acting on a petition filed June 25, bankruptcy Judge Christopher M. Klein granted the winery access to $600,000 owed the firm to pay ongoing business expenses.

The judge also approved a “custom crush” agreement Indian Springs has with a Lodi winery to turn up to 365 tons of grapes from the 2004 harvest into wine.



Indian Springs filled for reorganization under Chapter 11 of the U.S. Bankruptcy Act on June 15 just hours after an Oregon bank filed suit alleging the winery and its owners defaulted on more than $8 million in business and personal loans.

Under Chapter 11, a business is allowed to operate while making arrangements to restructure its debt. The business operates under the supervision of the U.S. Bankruptcy Court and its appointees.




Indian Springs said it was short of operating cash when it filed for bankruptcy in June, and asked the court for permission to use $600,000 due the winery from Wine Asset Management Inc. to finance its operations, particularly the 2004 growing season.

Attorneys for PremierWest Bank of Medford, Ore., one of the winery’s major creditors, objected to the request, stating “the bank is skeptical of the purported profit potential of this debtor even on an interim basis. … Any chance of reorganization is speculative.”

That led to a series of maneuvers by attorneys on both sides until Klein issued his ruling Sept. 7. A final order hadn’t been filed by Wednesday.

Klein also gave Indian Springs permission to enter into the custom crush agreement with Kautz Winery of Lodi.

In a petition filed with the court, Indian Springs said it grew grapes on 125 of its 225 acres for the 2004 harvest, and that grapes from 62 acres have been sold under contract to The Hess Collection winery in Napa and Villa Mount Eden Winery in St. Helena.

The winery said it has an agreement with Kautz to take up to 365 tons of grapes not under contract to make and store wine. Indian Springs and Kautz would split the net proceeds from sale of the wine.


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