Cash Crunch at Vinfolio

New investors restructuring San Francisco firm for wine collectors

Tim Fish
Posted: January 19, 2010

Vinfolio, a San Francisco-based company that helps collectors store, manage, buy and sell wine, is the latest wine firm to falter during tough economic times.

The company announced Friday that it was reorganizing and that a new group of investors led by wine-industry veteran Jon Moramarco had acquired Vinfolio's secured debt. The restructuring, known as an assignment for the benefit of creditors, is a state-level alternative to filing for federal bankruptcy protection.

Vinfolio remains in business during the restructuring. "The lights are on and we're operating and shipping wine," said Jay Moore, vice president of marketing, who acknowledged that the company has been inundated with questions from nervous customers.

Because of the filing and the various parties involved, Moramarco and Moore could offer only limited details. Vinfolio's storage warehouses continue to operate as usual and wines stored there remain the private property of customers, Moramarco said. The company currently has nearly half a million bottles of wine in the warehouses.

The fate of wines purchased or sold through Vinfolio remains more vague. "If you bought wine and the order says it was fulfilled but hasn't been shipped yet, you're fine," Moore said. "Wines purchased as pre-arrivals (yet to be released Bordeaux, etc.), we haven't worked out yet."

Moramarco was even less specific. "Unfortunately, I can't give any definite guarantees," he said. "As a secured creditor we're trying to take every step we can so that people are paid for their wines and get the wines they purchased. It will take a little bit of time to sort out."

Launched in 2003, Vinfolio seemed on a successful track. It expanded at a quick clip, particularly focusing on thriving markets in Hong Kong, where it also has an office. In September 2009 it raised $4.5 million in new capital.

By last week, however, its supply of money had dried up. "The previous secured creditor took some action that was against our will that resulted in a few bounced checks," Moore said. "That situation is still being resolved."

Moramarco called it "a cash imbalance," which in layman's terms means Vinfolio was spending more money than it was making. Moore explained it further, "Like everybody in the luxury wine market, there has been pain this year. We're not immune to the forces at play."

In the meantime, Moramarco and his team are trying to put together a new business model that will allow Vinfolio to remain in business and thrive in the future. "Vinfolio provides a good service for wine collectors," he said. "We're just trying to figure out the right road forward."