Rabbit Ridge Winery Bankruptcy Trustee Hires Farm Operator for 2021 Harvest; Most Grapes Still Unsold

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Less than a quarter of Rabbit Ridge Winery’s 253 tons of Paso Robles wine grapes have been committed to buyers according to a 70-page, Aug. 9 court filing by court-appointed bankruptcy trustee Richard A. Marshack (premium link) who is charged with overseeing the winery’s Chapter 7 asset liquidations.

Table of available grapes, yield estimates and price/ton

Farm Operator Hired

The Trustee has hired Rabbit Ridge’s current owner, LeRoy Codding, to oversee the harvest and other farm operation tasks.

 

Court documents indicate that Codding’s company — Northern Holding — abruptly became Rabbit Ridge’s owner on or about Oct. 28, 2020 just as Farm Credit West was preparing to foreclose on the property.

 

That same day, winery founder and winemaker  Erich Russell signed quitclaim deeds transferring the properties Northern Holding. According to the court, those quitclaim deeds were recorded on the same day — as was Northern Holding’s Chapter 11 bankruptcy filing.

 

For more details, see (Free link): “Unusual court proceedings mark bankruptcy auction for Rabbit Ridge Winery property.”

 

On June 15, 2021, the Chapter 7 was converted to Chapter 7 liquidation when (Free link) an attempt to sell the real estate assets failed. Northern Holding has previously been threatened by the court with liquidation because it failed to file the required asset, liability and other disclosure documents.

Trustee says Codding best at interim farm operation even if not Chapter 11 savvy

“The Trustee concluded in his business judgment that while Mr. Codding may not have understood all of the best practices in connection with a Chapter 11 bankruptcy case but now believes that Mr. Codding will work in earnest for the benefit of the Estate.

“The Trustee believes [Redacted, premium].

“A true and correct copy of the crop estimated yields as of August 5, 2021 prepared by Mr. Codding is attached to the Declaration of LeRoy Codding (“Codding Declaration”) as Exhibit 3.”

“Furthermore, pursuant to the farm management agreement (previously defined as “Agreement”) [Redacted, premium]

“Thus, all of the financial risk in continued operations will be borne by Mr. Codding.

“A true and correct, executed copy of the Agreement is attached to the Declaration of Richard A. Marshack (“Marshack Declaration”) as Exhibit “1.”

“If Operator fails to procure and maintain adequate insurance, or fails in any other way to properly maintain and cultivate the crops, the Trustee will terminate the Agreement and remove Operator.”

 Codding to be paid 5% of net profit as farming operator

“As stated in the Agreement, Operator projects that gross revenue from the sale of the current crop is $723,000 and projects that expenses will be $400,000.

“The Agreement provides that [Redacted, premium].

“Operator will not be compensated other than [Redacted, premium].”

 

Profit & Loss Statement

Sale feasibility uncertain, but one potential buyer performing due diligence

In his Aug. 9 filing, the Trustee expressed doubt whether it would be feasible to sell the properties now, but noted that there was one buyer named — the [redacted, premium] Family — conducting due diligence.

Court Documents (Premium Subscriber Access)

Operator agreement also contains varietal block diagrams, numerous photos of wines, budget tables and more.

 

• Rabbit Ridge – Farm Operator Agreement
• Stipulation to turn over San Marcos Real Property to Trustee