Financially troubled Viansa Winery in Sonoma Valley is emerging from Chapter 11 bankruptcy after its largest creditor agreed to assume ownership. Laurus Master Fund, an offshore hedge fund, was owed about $40.5 million by former owners 360 Global Wine Co., which purchased Viansa from members of the Sebastiani family in 2005 for $31 million.
Laurus helped finance 360 Global's acquisition of Viansa, and was the only viable bidder for the business during a Dec. 6 auction in a Reno, Nev., bankruptcy court. Bankruptcy papers listed hundreds of creditors, including many grapegrowers in the area. In the settlement, creditors received anywhere from 3 to 25 cents on the dollar.
The winery, with its Tuscan-style marketplace, was once a popular tourist destination and had a thriving direct-sales business, but the company foundered in the past two years. John Bryan, a turnaround expert hired by 360 Global to be CEO during Chapter 11, called the situation "dire" when he arrived in March of this year. "This place was in deep, deep trouble," he said.
360 Global had virtually no track record in making wine but had extensive plans to expand Viansa's production. In 2005, former CEO Joel "Jake" Shapiro told Wine Spectator, "I think we can double or triple Viansa's sales over the next 36 months." Those plans were never realized and after investments like a joint venture with Kirkland Ranch Winery in Napa collapsed, 360 Global found itself overextended, Bryan said.
The company stopped paying its bills and suppliers soon refused to make deliveries. The facility fell into disarray and the once-thriving marketplace was virtually empty of food and merchandise. Tourists and tour buses soon stopped coming. It became so bad, Bryan said, that employees had to haul away trash in pickup trucks since the garbage trucks stopped coming. Members of the wine club also stopped receiving shipments that were already paid for.
Bryan said Laurus plans to retain ownership and to continue to rebuild the winery and brand. Since March, the company has invested $6 million in refurbishing the property, trying to make amends with suppliers and wine club members and restocking the market.
The sale is the latest chapter in a tumultuous history for the Sebastiani family in Sonoma Valley. Sam and Vicki Sebastiani started Viansa in 1989 after Sam was ousted as the president of Sebastiani Vineyards, which his grandfather had founded in 1904. At one point, Viansa was one of the region's most popular tourist sites, producing 50,000 cases of wine a year and drawing 300,000 visitors annually with its bus-friendly facility.
In 2004, Sam and Vicki filed for divorce and transferred ownership of Viansa to their seven children. The children struggled to keep the winery together and decided to sell. As 360 Global filed for Chapter 11, the Sebastiani family—which had guaranteed certain debts—were reluctantly drawn into the conflict. Bryan said they were only peripherally involved in the latest negotiations.
"I've never seen anything like this," Bryan said of wading through Viansa's recovery process. "It was very messy. This was arguably a $20 million company and when I got here there was $300 in the bank."