Owner of Viansa faces $39 million in debt, hopes to reorganize

Financially troubled 360 Global Wine Co. has filed bankruptcy, seeking protection from dozens of creditors while it attempts to reorganize $39million in debts.

The company, which owns Viansa Winery outside Sonoma, filed the Chapter 11 petition Wednesday in U.S. Bankruptcy Court in Reno, Nev., as a Nevada corporation. Under Chapter 11, the company continues to control the business while it seeks court approval for a restructuring plan.

The move came as 360 Global failed to make scheduled payments, lost its ownership stake in a Napa winery, and lost $600,000 in the failed purchase of a Nevada mining company.

The filing stated 360 Global has $43million in assets and owes $39million to more than 50 creditors. A creditors meeting is set for April 16 in Reno.

Connecticut investment banker Joel "Jake" Shapiro, who started 360 Global in 2002, resigned as chief executive officer Tuesday but will remain at the company as president. 360 Global's directors appointed a Los Angeles investment banker, A. John Bryan Jr., as CEO to lead the restructuring. Bryan did not return calls seeking comment.

Six of the company's 20 largest creditors are growers based in Sonoma and Napa counties.

Serres Ranch, a Sonoma grower, is owed $415,794, according to the bankruptcy filing. The grower received only one of three scheduled payments for grapes it delivered to Viansa during last year's harvest, owner John Serres said. A year ago, he said, the company was late with payments but managed to catch up.

"They mentioned they needed some time. I just thought they could put it all together and make it happen again. It's looking a lot different now," Serres said. "Certainly it's disappointing. But we haven't given up hope."

Analysts traced the seeds of the company's financial crash to insufficient funding and a lack of experience in the wine business. In that respect, analysts said, 360 Global's bankruptcy is similar to the downfall of Legacy Estates Group, which went bankrupt and later sold its three wineries to Santa Rosa's Kendall-Jackson Wine Estates.

Both 360 Global and Legacy Estates bought multiple wineries, relied on high-interest loans and banked on combined winery operations to spur business growth, said Vic Motto, chief executive of Global Wine Partners, a St. Helena wine investment bank.

"But those synergies and the growth are really elusive unless you know how to run the business," Motto said. "Their problems have nothing to do with the wine industry. Their problems have to do with the structure of their financing. They just fall under the weight of the debt."

The wine business is tough and there was ample reason to doubt the venture would be successful, said John MacConaghy, a Sonoma lawyer specializing in bankruptcies for the past two decades.

"It's very rare for a company of any kind to successfully operate when it has no equity and all debt," MacConaghy said. "We've done a lot of investigation into them. They were very thinly capitalized."

For instance, 360 Global purchased its centerpiece, Viansa Winery & Italian Marketplace, using $34.5million from Laurus Master Fund, a hedge fund. The company missed debt payments to the fund, reflecting the financial pressures it was under.

A joint venture with Kirkland Ranch Winery in Napa broke apart after Larry Kirkland accused 360 Global officials of failing to make loan payments or market Kirkland wines as called for under the agreement.

Kirkland filed for Chapter 11 bankruptcy in September. In December, Kirkland won back the 50 percent stake that 360 Global received under the joint venture, Kirkland Knightsbridge, said MacConaghy, who represents Kirkland in the bankruptcy case.

Another blow for 360 Global was the loss of $600,000 in the failed Nevada mining company purchase. The company used the money, taken from Viansa accounts, as a down payment, but couldn't come up with the balance and forfeited the down payment, MacConaghy said.

Kirkland could become the largest creditor in the 360 Global bankruptcy. MacConaghy said Kirkland will seek $15million in damages, but 360 Global didn't list Kirkland as a creditor in the bankruptcy filing.

The filing listed the 20 debtors owed the most, a cumulative $6.18million. They include a half-dozen grape growers, many of whom sold grapes to Viansa long before 360 Global purchased the winery in 2005 from the family of Sam Sebastiani, a third-generation Sonoma Valley vintner.

Serres has been selling half his crop of mostly Bordeaux varietals each harvest to Viansa for more than a decade under a contract he didn't consider ending, despite 360 Global's financial problems.

"This is not an easy deal," he said. "We get one payday a year. And meanwhile I've got to pay all my harvest bills, all my trucking bills."