Bidders For New Vine Assets Say Auction Process Biased To Favor IBG

The assets of New Vine Logistics (NVL) will almost certainly wind up in the hands of Inertia Beverage Group (IBG) say both currently registered bidders and those who have dropped out of the July 27 auction because of what they allege is a “stacked deck.”

PROCESS LIKENED TO  “INSIDER TRADING”

While Silicon Valley auction house, Sherwood Partners, has issued an auction notice and general list of items to be sold ($VIP Content) “in one or several large lots,” there has been widespread grumbling over the inability of bidders to determine exactly what is for sale.

“The auction house notice said that they’re selling all the accounts, contracts … the books and everything on paper, financial or otherwise,” said one bidder. “But that’s meaningless without the ability to examine those and determine just what’s in there. The process is totally opaque and the only people who know what’s valuable and what’s not are the people at IBG. That’s a stacked deck. They better be glad they’re not playing poker in an Old West saloon or they’d be dodging bullets.”

“It’s like insider trading, and that’s a fool’s game,” said a second qualified bidder.

Wine Industry Insight has requested comments and corrections from IBG, but had not received them by publication. We will include those when received.

BIDDERS SLAM DISCLOSURE

“There is no bidding package that has been supplied to date,” said the representative of a large company who decided not to bid in this round. “There’s been no disclosure of client list or revenues and there is no representation that the contracts or clients are transferable.”

“Who cares about the phone system or the warehouse racks,” said yet another qualified bidder who decided not to register this round. “The real value going forward lies in the client base. But we can’t even find out how many winery clients they still have, what their revenues are or the quality of the clients still there.”

TOO MANY UNKNOWNS AND  STRINGS ATTACHED TO AUCTION LOTS

“I decided not to bid even before I finished my conversation with Hogan (Michael Hogan who is in charge of the auction for Sherwood Partners),” said one highly placed financial player with substantial wine industry investments. “So he tells me that the assets are scheduled to be sold as a group since the total return needs to be considered in the process.  Then he emphasizes that assets will be sold ‘as is, where is’ and that that liens, encumbrances, etc. will need to be addressed by the buyer! What a snakepit! What an open statement. All the New Vine investors will have claims on that stuff not to mention leasing companies, and others. The unknown complications certainly outweigh any benefits I can see. That’s a great — and perfectly legal — way to drive away any bidder with half a brain in his head. The only people who know what the complications will be are the IBG folks.”

ATTORNEY SAYS AUCTION COULD BE CHALLENGED

“If the playing field is not level for all bidders, then the entire process could certainly be challenged on excellent legal grounds,” said an attorney with a law firm representing a potential bidder. “There is a fundamental issue of fairness and equity involved in this or in any other bidding process. If one side has a significant and demonstrable advantage over the other, that makes a legal challenge more likely to be successful. I don’t expect that the challenge would come from unsuccessful bidders, but rather from investors and creditors of New Vine who feel that their financial interests suffered as a result.”

AUCTION SCHEDULED FOR JULY 27 IN SAN FRANCISCO

As previously reported, (IBG Delays Auction, Threatens Potential Investors, Contends With NVL Palace Coup), the auction of NVL’s assets will take place at 10 a.m ., Monday, July 27 Cooley Godward Kronish LLP, 101 California Street, 5th Floor, San Francisco,  CA 94111.

According to the auction notice, “Bidders must register no later than Friday, July 24, 2009 at 4:00 p.m. PDT by contacting Michael Hogan of Sherwood Partners at (650) 329-9996, to whom inquiries may also be made. Terms are cash or cashier’s check only, due on acceptance of bid unless other appropriate credit arrangements have been made no later than 72 hours prior to the sale.”