|WINE EXECUTIVE NEWS |Canned wine marketers left in lurch after Sonoma Cider/Beverage Works abruptly shuts down after fizzing through $6.2 Mil in venture capital. | March 30, 2018
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March 30, 2018
Canned wine marketers left in lurch after Sonoma Cider/Beverage Works abruptly shuts down after fizzing through $6.2 Mil in venture capital.
After five years of fizzling through $6.2 million in venture funding, Sonoma Cider and its contract wine canning operation have abruptly been shut down by investors and have left numerous contract customers --large and small -- scrambling to recover their wine, figure out how to keep it on track, and get it to market.
The smaller the operation, the larger the potential damage with some fearing they may not survive.
According to the Sonoma Cider web site, the company was founded Jan 16, 2013 by a father/son team, David Cordtz, Robert Cordtz.
In addition to interviewing seven customers or others close to the business, Wine Industry Insight reached out for comment to David Cordtz and board member Bob Greenberg for comment but none was received by publication time.
Most customers refused to be interviewed on the record because of a gag clause in an agreement that allows them to reclaim their property from the shuttered business (more on that, below).
What's up for grabs?
According to a company insider the company is trying to sell:
- Two brands - Sonoma Cider and Ahoy Wines
- A retail taproom
- A warehouse in Healdsburg, and
- Two canning lines and associated production facility
"We didn't take any actions to prepare for this because we were told by management that they had enough money to go through the end of May," said Mike Williamson, Chief Operating Officer and Chief Financial Officer for Seattle-based Precept Wine whose Original House Wine line of canned wine was the largest customer.
Williamson was sanguine about events saying that, for them, "it's not the end of the world." He was confident that he would be able to "work well with existing management" and be able to use mobile canning lines and other contract facilities to stay on track."
Smaller customers said they were facing an "existential situation."
The March surprise: Simplified, budget version of bankruptcy
Instead of any sort of warning, customers were abruptly handed a "take-it, or leave-it" legal document -- "Termination and Mutual Release Agreement" -- which unilaterally broke the existing contract with customers.
Significantly, the document stated that the company had decided to "make a general assignment for the benefit of creditors under California Code of Civil Procedure Section 493.010".
Known simply as an "ABC," an Assignment for the Benefit of Creditors is a quick, fast, cheap alternative to filing for bankruptcy in federal court. The American Bar Association considers it an "Effective Tool for Acquiring and Winding Up Distressed Businesses."
However, the process is entirely directed by the filing company and leaves creditors -- and in this case, customers -- in the lurch and potentially in the hole for tens to hundreds of thousands of dollars of wine while they scramble for alternative ways to get their product to market. The ABC, in this case, has left wine uncanned and canned wine unlabeled.
ABC's not unknown in wine industry
Wine Industry Insight has covered ABC's in the past and has found widespread and intense, bitterness, anger and frustration. This was especially vicious in the Crushpad Asset Sale in 2012. Other cases include:
These were also bitterly contested but neither had the widespread bad publicity of the Crushpad debacle.
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Also in this issue:
"Wine held hostage" -- The Gag Order & Handcuffs
Fizzling through $6.2 million. Where did the money come from?
Who is Bob Greenberg: Investor #1 and Advisor, now in charge of the funeral
Who Are The other investors?
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