Copia To Liquidate, Then Transform Itself Into For-Profit Enterprise

Copia, Robert Mondavi’s visionary wine and food center, received permission Friday morning for a procedure that calls for it to liquidate all of its assets, pay employees’ priority wage claims then create a plan to transform the real estate and remaining assets into a for-profit enterprise.

Copia has liabilities of at least $78 million, including $64 million in Caliifornia Municipal Bonds underwritten by the Bank of New York and insured by ACA Financial Guaranty Corp.

ORIGINAL REORGANIZATION PLAN REJECTED

Copia ceased operations just before Thanksgiving, 2008 and filed for Chapter 11 bankruptcy on December 1, 2008. Its “super-priority” reorganization plan — which called for a sale of the real estate and the immediate borrowing of $2 million — was opposed by Bank of New York and ACA and subsequently rejected by Federal Bankruptcy Judge Alan Jaroslovsky.

LIQUIDATION PLAN AGREED ON IN PRINCIPAL

According to Copia attorney John MacConaghy, discussions with the Bank of New York and ACA have resulted in an agreement in principle to dissolved Copia “in an orderly manner.

The details of the plan, which are slated to be hammered out in the next three weeks, calls for Bank of New York to foreclose on Copia’s main asset — its building and land in downtown Napa — and other fixtures, furniture, and trademarks.

COPIA: “THE MOST BEAUTIFUL WHITE ELEPHANT”

MacConaghy called the Copia center “the most beautiful white elephant this court has ever dealt with” and suggested that for-profit uses might include a conference center, catering facility, the Napa City Hall and development of raw land as a hotel, restaurants and mixed use retail.

The attorney representing Bank of New York and ACA spoke positively about the plan noting that they would “get access to local talent and knowledge which would help maximize the return.” He said Bank of New York and ACA would work in a manner designed to “maximize goodwill.”

RECOVERING LOST MILLIONS AN UPHILL STRUGGLE

Regardless of how successful any for-profit enterprise will be, ACA faces a daunting task to recover the $64 million in municipal bonds it has insured. In prior filings, Copia stated that a Los Angeles-based private capital firm, PSC Asset Management (part of Pacific Star Capital) had offered $28 million for the real estate.

Wine Industry Insight interviewed three Napa-area real-estate experts who said they thought the value would be “considerably less when the time came to turn over the deed.”

CREDITOR’S MEETING CANCELED

A creditor’s meeting had been scheduled for Jan. 16, but it was canceled for “lack of interest.”

With the likelihood that more than $40 million in secured debt would be left hanging after liquidation, the vast majority of creditors — who are are unsecured — meant that that they stood to gain nothing for their efforts.

Depending upon its success, the plan with Bank of New York and ACA might produce some level of income that might allow those unsecured creditors to recover something.

PREVIOUS WINE INDUSTRY INSIGHT COVERAGE OF COPIA BANKRUPTCY

• Wineries and Distributors Dodge Copia’s Big Bankruptcy Bullet

• Copia’s $125-Million Crash