Winery springs toward recovery
While there is still much to be done, Indian Springs Vineyards of Penn Valley is nearing the end of its nine-month struggle to shed a mountain of debt and emerge from bankruptcy as a viable winery.
The new Indian Springs will make less wine and serve a smaller market, and its 225 acres of vineyards will sprout luxury homes along with grapes. The land, however, will no longer belong to the winery.
But the winery will remain under the control of its founders and emerge from bankruptcy still Nevada County’s largest wine producer.
“We still keep the winery and its assets,” general partner Dennis Ball said. “We’ll be doing the farming in the vineyards. It’s kind of a win-win for both of us.”
Indian Springs cleared a major hurdle this week when bankruptcy court Judge Christopher M. Klein gave the winery permission to sell its 447 acres of land on Indian Springs Road to Catlin Properties of Sacramento for $5,750,000.
PremierWest Bank of Oregon will receive $2,175,000 from the sale to settle its debt of more than $3.3 million.
The winery’s other major creditor, TransAmerica Life Insurance Co., holds the first trust deed on the property and is owed more than $4.2 million. That debt will be assumed by Catlin if the deal goes through.
Catlin has 30 days, beginning last Wednesday, to verify material facts. If it decides to go ahead with the deal, Catlin has to make a down payment at the end of the 30-day period and then close escrow in 15 days.
The sale of the property includes a lease-back provision that allows Indian Springs to continue operating the vineyards on the property. The land is now zoned AG-5, which means it can be divided into five acre parcels if the county approves a development plan.
Jim Bowman, Catlin’s vice president for residential and land acquisition, said the developer has focused so much attention on acquiring the land during the past eight months that it hasn’t formulated detailed development plans.
“It’s a little premature for me to comment on that. There’s still some logistical things that have to be worked out with the court and seller,” he said.
“It’s a beautiful piece of property and it’s a beautiful vineyard,” Bowman said, and Catlin would like to build luxury homes on the site with low density. He said the developer will meet with the vineyard’s neighbors before plans are made public.
This will be Catlin’s second development in the county – the firm is also involved in the South Hill Village project proposed for Grass Valley. “We’re committed to the Nevada County area,” Bowman said.
Attorney William Lukens of San Francisco, special counsel to the winery, said Catlin was the only serious bidder for the property. “What does this mean to the community?” he said. “This is a very, very good development.
“We’ve got a debt-free winery, plenty of supply and a source of grapes that is exactly the same as they had before,” he said. “The quality standards will continue.”
Ball will consult Catlin on management of the vineyards, and a contract is being negotiated to guarantee Indian Springs a long-term supply of grapes, Lukens said.
The winery will continue to sell its wine in seven to 10 key states and California, with special emphasis on its wine club’s 1,600 members and tasting room at 303 Broad St. in Nevada City. It plans to produce about 10,000 cases a year, down from high of more that 19,000.
Indian Springs was the only Nevada County’s winery with a national presence when it filed for Chapter 11 bankruptcy last June 15. (Chapter 11 allows a business to operate while it makes arrangements to restructure its debt.)
The winery filed for bankruptcy protection the day PremierWest sued in Nevada County Superior Court to place Indian Springs in receivership, alleging that the winery and Ball defaulted on over $4 million in loans.
Ball said in an interview after the bankruptcy filing that Indian Springs was a victim of a slump that began in 2001 for the state’s wine industry.
The winery sold 70 percent of its grape production to other wineries and depended on revenue from two major wineries to pay off debt incurred when Indian Springs doubled the size of its vineyards in 1996.
But one winery stopped taking grapes in 2002, followed by the other in 2003. The double default put Indian Springs in a financial bind that eventually led to the bankruptcy filing.
— On the Net
Indian Springs Vineyards
What’s in store
After emerging from bankruptcy, Indian Springs Vineyards plans to:
• Bottle about 10,000 cases of wine a year, down from more than 19,000 cases.
• Sell its wine in seven to 10 key states in the Southwest, Midwest and East, with the greatest emphasis on California. Previously, the wines were sold in 15 states.
• In California, focus on sales through its wine club and tasting room at 303 Broad St., Nevada City.
• Farm and harvest grapes at the vineyards on Indian Springs Road. Indian Springs would lease the vineyards after selling them to developer Catlin Properties.
Source: Dennis Ball, Indian Springs Vineyards
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