Aussie Wine Company Faces Angry Creditors

Grateful Palate's R Wines is in receivership; grapegrowers fear they won't get paid
Jul 1, 2010

Trouble is brewing in Australia. The Grateful Palate's Australian affiliates, which produce wine under labels such as Bitch Grenache, Evil Cabernet Sauvignon and Marquis Philips for American importer Dan Philips, are in receivership and face the danger of possible bankruptcy. Growers and other creditors for the South Australia-based affiliates of the company received notice on June 18. Many growers, already facing tough times, worry that they'll never get paid for fruit they sold Philips.

Philips, the company's founder and owner, confirmed that he is in negotiations with his top creditor, Dutch lender Rabobank, but declined further comment. The bank initiated the action to put Grateful Palate International Pty Ltd and several related Australian companies into receivership. The most prominent is R Wines, a partnership with winemaker Chris Ringland, but 3 Rings, a joint venture involving Philips, Ringland and grower David Hickinbotham, is also part of it.

Philips built his wine operation by partnering with Australian growers and wineries to produce popularly priced wines with clever, colorful labels for his import business. Several of the wines enjoyed notable success in America. The wines are made and blended under Ringland's supervision to match the marketing idea. They include Boarding Pass and First Class, Darby & Joan, Strong Arms, Punk Bubbles and Bon-Bon Rosé.

Growers tell Wine Spectator they have filed claims with the receiver, PricewaterhouseCoopers, for grapes delivered to R Wines in 2009 and/or 2010, alleging that they have not been paid in full. Adrian Hoffman, a veteran Barossa-based vineyard owner and the liaison between R Wines and 25 members of the Valley Growers Cooperative (VGC), said that Philips' company owes them A$750,000 (US$628,000). Other growers have filed similar claims, Hoffman said.

"They notified us prior to delivery in 2009 that they would pay 50 percent on July 31, another 25 percent in September and 25 percent in December, but when the first payment didn't come through we were concerned," said Hoffman. "We have been paid 25 percent of the bill, but it doesn't look like any more will be forthcoming. Personally I'm owed quite a lot but I'm most concerned for our growers. It's quite a mess."

Hoffman is also owed money for 2010 fruit supplied to R Wines, though he admits that the company purchased very little this year. "It's not just a matter of being paid for last year's fruit but of finding a home for the fruit this year," he said. "We're in massive oversupply at the moment and we've been processing the 2010 vintage into bulk wine in the hope that R Wines might be able to purchase it."

It is unclear why Rabobank decided to take action at this time. The grower contracts involved represent a fraction of Philips' total debt. It's unclear how much money Philips owes other creditors, including Rabobank. Neither the bank nor PricewaterhouseCoopers have returned phone calls. "Rabobank is acting in its best interests," Hoffman said, "but it looks like the growers are going to be caught in the crossfire." Some growers worry any money made on Grateful Palate's assets in case of bankruptcy will go straight to Rabobank, leaving them high and dry.

Hickinbotham's McLaren Vale vineyard, which supplies grapes to Clarendon Hills, is not involved in the receivership. Neither is his Riverlands property, from which he makes the popularly priced Paringa wines. Hickinbotham said that he is ready to buy 3 Rings from the receiver.

For his part, Hoffman said he is considering a claim on R Wines and the vats of wine that remain unbottled and unsold. "That would be better than what the administrator can do," he said. "I would like to keep the joint venture going. It has some real merit. There are some very good winemakers involved."

Ringland was en route home to Australia from the United States at press time. As a partner in R Wines and 3 Rings, he is on the hook along with Philips as this plays out. But these are not his only wine ventures. He has his own winery, Chris Ringland Shiraz, his own vineyards in Barossa and a winery in Spain, none of which are involved. "They are secure," he said in an email. "In addition, my work in Spain acts as a very useful buffer for these misfortunes."

Grateful Palate Imports, a separate company based in Fairfield, Calif., is not directly involved in these proceedings. It is also owned by Philips, and imports some 30 different wineries. Aside from Ringland, the list includes Burge Family, Greenock Creek, Hazyblur, Majella, Noon and Trevor Jones.

Economy Australia News

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