Premier Cru is well known as a major wine retailer and importer. Their specialty has been offering expensive, and many times rare, wines at unusually low prices. The trade-off, however, for getting a rare or unusually pricey bottle of wine was the promise of future delivery. Founded in 1980, Premier Cru seemed to run a successful business dealing in what have been referred to as “wine futures” before the trouble started. Last year, several customers filed lawsuits against the company alleging fraud and misrepresentation. According to an article in published by Wine Spectator, one of these customers who filed suit paid, up front, more than $981,000 for 1591 bottles of wine, yet received virtually nothing in return for his prepayment. Other wine retailers speculate that Premier Cru may be in a financial jam due to the fact that some of the wines they deal in have not appreciated as well over the past few years. On December 10, 2015, Premier Cru shut the doors to their retail store in Berkeley, California, yet continued to try to make some sales and collect funds through internet sales.
Lawsuits, Instability Lead to Bankruptcy
The pressure of the lawsuits, along with the seeming instability of the industry, finally lead to the company seeking relief under chapter 7 bankruptcy. The California company filed its chapter 7 on January 8, 2016 in the Northern District of California under the name Fox Ortega Enterprises, Inc. The petition lists approximately $7,000,000 in assets and a whopping $70,000,000 in unsecured debt. Their list of creditors includes nearly 9000 customers who pre-paid for wines that they have not received. These creditors include people from all across the United States and from several other countries including Europe, Asia, and South America. The first Meeting of Creditors is scheduled for February 24, 2016. At this hearing, the corporate representative(s), who will likely be John Fox who signed the petition as President and Hector Ortega the other principal owner, will appear to face their creditors. I imagine it will be a packed house with all the disgruntled customers! On the bright side, chapter 7 is liquidation of assets, so the unsecured creditors listed in the petition may recoup some of their money once all the assets are sold and distributed. A motion to employ an auctioneer has already been filed with the court and creditors have been invited to file their claims in order to receive their share from the assets, mostly wine inventory, which will be sold.
I like to point out “famous” bankruptcies to make the point that anyone or entity from a multimillion dollar corporation to a retired grandma may at some point experience more debt than they can handle on their own. Debt is relative to your financial situation. Our firm has years of experience in helping people get control of their debt by filing bankruptcy or debt consolidation. If you need relief from your creditors, please contact our office nearest you to schedule a free consultation with an attorney to confidentially discuss your options.