The bankruptcy case of Copia has taken a new turn with the defunct wine center in downtown Napa accusing its bank and bond insurer of mishandling a $71 million deal to refinance the complex.
In court papers filed this week, Copia said Bank of New York Mellon and ACA Financial Guaranty Corp. committed a breach of trust in their 2007 refinancing of the center, which closed in November after running out of cash. Copia?s documents included a draft of a lawsuit seeking $71 million in damages from the two companies.
Copia attorney Jean Barnier on Friday said the wine center is holding off suing while it holds settlement talks.
?We believe it?s a very strong case,? she told U.S. Bankruptcy Court Judge Alan Jaroslovsky in Santa Rosa.
Barnier also said a group of Napa business leaders is trying to reopen the center, but it needs more time to put the deal together.
Louis Cisz, an attorney for ACA and the Bank of New York, declined comment. The two financial institutions have denied any wrongdoing.
Copia, also known as the American Center for Wine, Food and the Arts, opened in 2001 and hosted more than a million visitors since.
Napa vintner Robert Mondavi, who died last year at age 94, launched the 12-acre project on the Napa River with a $25 million donation. The 80,000-square-foot museum featured art galleries, gardens, food and wine classes and Julia?s Kitchen, a restaurant named for famed chef Julia Child.
But the nonprofit lost more than $5 million a year, according to Copia?s filings in bankruptcy court.
Copia borrowed almost $70 million in 1999 to build and open the facility. The complex deal used tax-exempt bonds issued by California?s Infrastructure and Economic Development Bank, a state agency also known as I-Bank.
Copia was $2.8 million in debt by the end of 2006 and was forced to refinance the bonds in 2007 because it was in danger of defaulting, according to its proposed lawsuit.
The new financing deal put together by Bank of New York and ACA violated the rights of Copia?s original bondholders, Copia said. The deal was structured so that ACA was protected from liability for insuring the bonds, and Bank of New York had a conflict of interests in the transaction, Copia said.
The draft litigation also names I-Bank as a defendant. I-Bank executive director Stanton Hazelroth didn?t return a call seeking comment Friday.
In a liquidation plan filed Monday, Copia said it plans to auction the Napa property for a minimum of $25 million, with the proceeds going to its 4,000 creditors.
But Barnier said Friday an auction would be a last resort if Copia can?t find a better way to dispose of the property.
She said Copia is talking with the Napa group, the Coalition to Preserve Copia, about leasing the complex with an option to buy it.
The coalition has proposed using the facility as a visitor information center, wine and food conference center, restaurant and wine tasting center.
The Culinary Institute of America, which has a cooking school, restaurant and other programs in St. Helena, also is interested in being a part of the project.
The coalition would collect fees from Napa hotels to lease the facility while it seeks financing to buy it, according to court documents.