Premier Cru: Bankruptcy proceedings begin in Berkeley wine scandal

Jan. 27--BERKELEY -- A federal bankruptcy judge Wednesday ordered a trustee to secure and insure more than 30,000 bottles of wine stored at a disgraced wine business that has been accused by disgruntled customers of running a wine Ponzi scheme.

In the first major activity in Premier Cru's bankruptcy case, Judge William Lafferty allowed money to be spent on utilities, an alarm system, Internet service and insurance on the inventory and building, along with payments to a company taking an inventory of what wine remains in the 10,000-square-foot warehouse.

"This is not 2-Buck Chuck," trustee Michael Kasolas told the judge Monday at a hearing in Oakland. "This is an amazing collection of wine."

Premier Cru filed for bankruptcy earlier this month, claiming $7 million in assets and $70 million in debt. The filing estimates that between 5,000 and 10,000 creditors are owed money, the bulk being customers claiming they are owed wine or refunds.

In more than a dozen lawsuits, customers claim they bought wine futures from the company but instead of receiving the wine, they received excuse after excuse.

At Monday's hearing, the judge and attorneys said a conservative estimate of the value of wine stored in the Berkeley warehouse was $6.5 million, while another $300,000 was estimated to be stored in London, Holland or in transit. Those figures are based on Premier Cru's internal database, and the trustee has hired a company to take an official inventory.

One Premier Cru customer spoke at the hearing and said the business stored more than 10,000 bottles of his wine in the warehouse.

Judge Lafferty said one of the potential issues that might come up during bankruptcy proceedings is: "Who owns this stuff?" He said customers might argue that the wine doesn't belong to the estate but rather the customers who bought it.

The trustee told the judge that owner John Fox had stopped paying for insurance on the building a year ago, and he needed to buy temporary insurance for the building and the wine inventory.

The judge referenced an FBI investigation when discussing the proposed insurance policy, questioning whether the coverage would insure potential "ill-gotten gains."

To pay off the nearly $1 million he owed a bank, Fox sold his personal home a week ago and now owes the bank about $150,000 to $200,000, according to court documents.

Parties plan to meet about every two weeks to sort through the complicated bankruptcy.

Contact Matthias Gafni at 925-952-5026. Follow him at Twitter.com/mgafni.

___

(c)2016 the Contra Costa Times (Walnut Creek, Calif.)

Visit the Contra Costa Times (Walnut Creek, Calif.) at www.contracostatimes.com

Distributed by Tribune Content Agency, LLC.