Liquidation nears end for half-million wine bottles held in Napa Valley warehouse after club’s bankruptcy

San Francisco Bay Area corporate finance adviser Jeff Shada is still waiting to receive six cases of wine out of the 100 he managed to get out of Napa Valley storage following the bankruptcy of a novel wine club concept that caught up more than 25,000 collectors nationwide in a similar situation.

“It has been over a year, and matters are just beginning to resolve themselves,” Shada said.

But Shada is among the fortunate customers who had stored wine they purchased in Underground Cellar’s “CloudCellar” program before the San Francisco company shut down and declared bankruptcy in late April 2023. It’s estimated the company had shipped out about 1 million bottles to club customers but had around a half-million bottles stored at the time it shut down.

Shada is one of 43 customers who banded together to fund a legal battle in Delaware bankruptcy court to get back not only the $585,000 in wine they had purchased but also the rest of the customers’ wine that was being held in an American Canyon warehouse as the case progressed, according to court documents.

That’s because of a tug of war in court over who owned the wine.

It came out during the court proceedings that the club had put the stored customer wine up as collateral for an $8 million loan from TriplePoint Venture Credit Inc. In early November, the court approved an compromise between the customer group and TriplePoint in which the lender would acquire the club assets — mostly, the stored wine — then offer customers a path to getting what they ordered.

But that path came at a price.

The first phase involved customers who had specific orders. They could repurchase the wine at a 21% premium over the original bottle price plus paying shipping, which could cost $2.97 to $7.75 a bottle or $35.64 to $93 a case, depending on the distance from Napa Valley.

Customers had until Dec. 14 to submit orders for that or lose any claim to wine ordered.

“I’ve spent $12,000 getting 1,000 bottles, at an average price of $100 a bottle,“ Shada said. He called the premium on repurchases a ”hostage fee.“

The second phase was for customers with missing bottles, gift cards, expired accounts or non-wine items to pay 21% over their outstanding balances to buy available wine. That stage ran from Dec. 15 through Jan. 23 of this year.

The last phase, expected to conclude this month, is to sell the rest of the available wine at “liquidation prices,” according to the Last Call Capital LLC website TriplePoint set up for to clear out the inventory.

As of 5 p.m. March 22, the Last Call website listed 89,333 bottles available for sale.

Jeff Quackenbush covers wine, construction and real estate. Reach him at jquackenbush@busjrnl.com or 707-521-4256.