Winery runs dry – Facing lawsuit over loans, Indian Springs files for bankruptcy
An Oregon bank wants to place Indian Springs Vineyards of Penn Valley in receivership, alleging in a suit filed Tuesday that the winery and general partner Dennis W. Ball have defaulted on more than $4 million in loans.
Ball issued a statement Wednesday saying the winery has filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code and will continue to operate.
“The company sought protection under Chapter 11 due to the financial problems affecting many small operations in the wine industry,” the statement said. “Through the reorganization process, Indian Springs anticipates resolving financial issues with certain lenders and moving forward with its operations.”
Ball wouldn’t comment beyond the statement, citing “pending litigation.”
PremierWest Bank of Medford, Ore., filed suit in Nevada County Superior Court seeking a restraining order and the appointment of a receiver for one of the county’s largest wineries. The suit names as defendants the winery, Ball and his daughter, Karen Swink, who is listed as a general partner.
The loans are secured by the assets of Indian Springs and Ball, which the suit alleges are being misappropriated. The bank said it filed the action to protect its interests.
A hearing on the suit was scheduled for Wednesday morning, then canceled. Attorney David F. Anderson of Woodbridge, who filed the suit for PremierWest, declined comment.
The suit alleges the bank loaned Indian Springs $2.8 million that was due June 5, but the winery stopped making payments in March and the bank issued a demand for payment May 4.
When Indians Springs didn’t reply to the demand payment, the bank called a second loan to the winery for $563,000 due in June 2005 and a personal loan of $750,000 to Ball due in May of 2005, according to the suit.
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.
In the statement, Ball said Indian Springs will continue “vineyard production and wine grape sales to outside wineries, its wine production and wine sales, and its tasting room and wine club services.
The Ball family purchased the 477 acres in 1982 and released its first wines in 1987. The winery started out with 111 acres of grapes and added another 138 acres in 1998.
Indian Springs markets 10 red and white varietal wines, and has won more than 60 awards in regional, national, and international competitions, according to its Web site.
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