[caption id="attachment_11611" align="alignright" width="300" caption="File photo from 2005 of New Vine's American Canyon fulfillment center. (Chris Chung photo)"][/caption]

NAPA - The lead lenders to Napa-based wine direct-to-consumer logistics provider New Vine Inc., which shut down briefly in early June amid funding problems, are set to hold a bulk foreclosure sale of assets July 14.

Napa-based wine direct-shipping service provider Inertia Beverage Group this week announced it and Cupertino-based Montage Capital LLC, which supplied mezzanine funds, were foreclosing on collateral New Vine used to secure loans. Inertia Beverage, which replaced Silicon Valley Bank as senior debt holder, supplied New Vine with money to restart operations last month. New Vine's board decided to shut down at the beginning of June after some investors opted not to supply more funds.

New Vine founder and former Chief Executive Officer Katie Hoertkorn and other executives explained the sale as "a normal next step in the disposition of New Vine assets" in a letter to clients this week.

"We anticipate that it will not cause any disruption to the services New Vine is currently providing its customers," the letter said. "Upon the conclusion of the foreclosure process, it is our goal that New Vine's services will continue to be provided in the manner to which our customers have been accustomed."

Tuesday's foreclosure sale covers a bulk sale of assets New Vine used for collateral but is not a sale of the business itself, according to Michael Hogan of Sherwood Partners, which is managing the foreclosure sale.

"Some people are saying this foreclosure sale notice says they're selling the business, but no, they're not selling the business, which is done through a stock sale," Mr. Hogan said. "Bidders would be buying assets free and clear of liens of the lender and any subordinates. Some of assets have some leases and financing the buyer has to take care of."

To maximize the bids received, the assets will be sold en masse or in up to three categories, if split at all, according to Mr. Hogan. Assets included in the sale are listed below.

However, some of New Vine's competitors told the Business Journal they still weren't certain what would be included in the sale. WTN Services, the Napa-based wine order fulfillment division of 1-800-Flowers, has registered to attend the auction but still isn't certain about bidding, according to Vice President and General Manager Chris Edwards.

"We'll make a determination whether or not there is any product, pieces of the business or otherwise to bid on after doing a period of due diligence," he said. "We're reviewing what pieces exist of the company and whether there is any value in any pieces of the company to absorb into our own business."

San Francisco-based wine e-tailing leader Wine.com, which formally launched its logistics division in Berkeley last month just after New Vine resumed shipments, hasn't yet registered for the auction, according to CEO Rich Bergsund.

"We, like others, are trying to learn more about what that is," he said about the public sale. "We're curious what assets are for sale."

Wine.com Logistics is based in the Berkeley fulfillment warehouse and uses the company's seven other warehouses nationwide to serve wine orders for longtime clients Harry & David, FTD and ProFlowers as well as new winery customers. Mr. Bergsund said the peak of wine shipments in December allows the company's existing infrastructure to handle demand without the need for any more facilities, in the North Coast or elsewhere.

Responding to wine industry speculation about the public sale, Inertia Beverage's benefit, CEO Ted Jansen released a statement defending the process.

"We have fulfilled all legal requirements for the execution of the auction and have been conducting the process in a fair and open manner, including directly contacting more than 35 companies to notify them of the auction and the opportunity to participate," he wrote. "These steps have been taken to maximize the value of the New Vine assets."

The foreclosure sale is set to begin Tuesday at 10 a.m. in the offices of law firm Cooley Godward Kronish, 101 California St., fifth floor, San Francisco. Bidders must call Mr. Hogan at 650-329-9996 by 4 p.m. Monday to be registered for the live auction. The sale will be "as-is, where-is," paid by cash, cashier's check or pre-arranged credit.

New Vine assets part of the July 14 public sale

Assets listed for auction from New Vine's offices in Napa and Oakland, fulfillment warehouse in American Canyon and data co-location center in San Francisco include the following:

accounts (including receivables)




contract rights or rights to payment of money


license agreements

franchise agreements

general intangibles

commercial tort claims


instruments (including any promissory notes)

chattel paper (whether tangible or electronic)

cash and cash equivalents

deposit accounts

collateral accounts


letters of credit rights (whether or not evidenced by a writing)

securities and all other investment property

supporting obligations

financial assets and books

personal property

order management and financial system: Oracle software, four Sun Microsystems servers

data storage system: two Sun storage arrays

Web-based customer-interface systems: Microsoft software and three Dell servers

order-management customer information systems: Microsoft and Biztalk software with six Dell servers and one Sun server

warehouse management systems: Provia and Oracle software with three Sun servers

networking and back office systems: Microsoft, Solarwinds and Noetix software with eight Dell servers; three Sun servers; two custom-built servers; one Sun and 1 Dell storage array; six Cisco routers; six D-Link router/switches; three Juniper Netscreen firewalls; four APC uninterruptable power supplies

telephone systems: three Avaya IP offices modules with five digital station modules

personal computers: 25 Dell monitors and docking stations, 45 Dell laptop computers and several Dell desktop computers with various computer printers

warehouse systems: 4,000 linear feet of pallet racking, approximately 1,750 linear feet of forward pick racking, conveyor systems, seven order pickers, three forklifts, two pallet jacks.

office furniture: cubicles, desks, chairs, cabinets, conference tables

Source: Sherwood Partners