Premier Cru folds with enormous debts

US wine retailer Premier Cru has been forced to file for bankruptcy after accruing debts of over US$70 million.

Having closed the doors to its Berkeley store in December, the company suddenly filed for a Chapter 7 Bankruptcy Petition last Friday. A Chapter 7 means the company will be liquidated and staff were reportedly given just a few hours notice to clear their desks and go home.

The merchant had been struggling for a while and even before it filed for bankruptcy last Friday it was being sued to the tune of US$3m by 11 unsatisfied customers for non-delivery of wine.

The company has been sunk by alleged debts of US$70m despite having reported assets of just US$7m, $6.8m of that in wine stocks.

An estimated 5,000 to 10,000 customers are listed as unsecured creditors, owed an enormous US$69.1m between them. Unsecured creditors apparently include venture capitalist Arthur Patterson of Accel Partners who is owed US$836,000 and Credit Suisse First Boston’s executive vice-chairman Adebayo Olungesi is owed a further US$500,000. Another US$936,033 is owed to secured creditors.

The company dealt almost exclusively in futures or “pre-arrival” as owners John Fox and Hector Ortega called it.

The first complaints that the company was failing to fulfill orders surfaced five years ago and grew in volume as the number of undelivered orders grew.

It is thought extremely unlikely that the unsecured creditors will get any of their money back although many are apparently attempting to get their banks to try reverse credit card payments.