[caption id="attachment_12034" align="alignleft" width="186" caption="New Vine's packing line at its American Canyon fulfillment center in 2005"][/caption]
NAPA - Keeping New Vine a viable direct-to-consumer wine order fulfillment and logistics provider after a pending foreclosure sale is an ongoing concern for its lead debt holder, Inertia Beverage Group, which is seeking investors for a potential bid for New Vine assets and long-term goals of building a network of trusted direct-shipping partners.
"We are worried about the New Vine situation because it plants seeds of mistrust that could carry on as we try to build our network," said Inertia Chief Executive Officer Ted Jansen.
New Vine customers have expressed concerns about whether the company will still be operating after the sale, originally scheduled for last Tuesday and now set for July 27. And some companies that have been considering bids at the auction have called for more time to explore the ongoing value of the assets, which are set to be sold in bulk.
Key investors in Napa-based New Vine backed out of follow-up funding in late May, and the board of directors of New Vine opted to shutter the company at the beginning of June. Inertia stepped in with cash - amounting to nearly $1 million so far, according to Mr. Jansen - to get shipments moving again from New Vine to consumers in mid-June.
Inertia worked out a deal with senior debt holder Silicon Valley Bank to take over its role. After considering various options, including restructuring New Vine to satisfy outstanding claims from creditors, employees and vendors, Inertia and junior lender Montage Capital opted for foreclosure as the quickest option to resolve the claims as Inertia was the only entity injecting New Vine with operating funds.
"Our preference is to get the New Vine assets at auction, but it is not a do-or-die situation," Mr. Jansen said. "We were already on a path to build infrastructure as part of our business model, but that takes time. New Vine simply allows us to do it quicker."
In early July, Inertia secured several million dollars in follow-up funding that was in progress before New Vine's situation to fund Inertia's business plan, including a direct-to-trade aspect started in May. That model includes developing a network of e-commerce, compliance, fulfillment, logistics and distribution partners as well as developing some aspects of the winery direct sales conduit model in-house.
Having New Vine's logistics and distributor relationships intact will be important to Inertia's business plan whether it's a part of the company or owned by a New Vine competitor, according to Mr. Jansen.
That viability also will help Inertia secure investor funding for any bid it makes for New Vine assets at the auction and, if Inertia has the top bid, money for further improvements to New Vine, he noted.
One New Vine customer told the Businss Journal that even with the assurances from New Vine staff that it would be operational after the sale, she was worried whether she would still be able to be in business in a few weeks.
New Vine "offers me the only model in town that works for a third-party wine club like mine," she said.