Online wine seller Vinfolio takes unusual ‘insolvency’ route

 

Vinfolio CEO Steve Bachmann.

Vinfolio Inc., a San Francisco-based online wine seller that raised $4.5 million in venture funding last September, entered into an “Assignment for the Benefit of Creditors” filing late last week. The filing is a state-level alternative to filing under Chapter 7 or Chapter 11 for federal bankruptcy protection.

Steve Bachmann, Vinfolio's CEO, posted a blog item about the filing on Friday.

“After three years of very rapid growth -- placing it among the top 15 fastest growing private companies in the SF Bay area from 2006 to 2008, Vinfolio experienced a much more difficult sales environment during 2009,” Bachmann said in the post. “A few weeks ago, we found ourselves in need of additional capital on a very near-term basis. The company investigated several options but new capital could not be obtained on a necessarily compressed timetable.”

As a result, “and to safeguard the interests of our customers and creditors (including for wine purchases, wine sales, and wine stored with Vinfolio),” Vinfolio's board of directors and shareholders approved the restructuring effort late Friday, Bachmann reported, in hopes of providing “the flexibility to develop the appropriate course of action going forward.”

The Assignment is being managed by an unspecified third party firm “of experts in such assignments (the ‘Assignee’),” he said. “Key employees have been retained and our operations continue as we undertake this process.”

Also on Jan. 15, Bachmann said, a group of significant customers acquired the secured debt of the company. The group is led by Jon Moramarco, managing partner of BW 166 LLC. Bachmann indicated that the group wants to see the business “continue its mission” and expects to fund the business near term while the Assignment process moves forward.

“Speaking as the founder of Vinfolio,” Bachmann concluded, “I’d like to apologize to you for this unexpected development and ask our loyal customers and users to be patient during the Assignment. Your continued support will aid the Vinfolio business as we go forward.”

Vinfolio said it raised $4.5 million in Series A funding last September from Panorama Capital, and launched a 250,000-wine bidding site in July dubbed the Vinfolio Marketplace, to allow wine enthusiasts and collectors to buy, sell and manage their collections.

At the time, Bachmann said the new funding would help fuel growth of the Marketplace and expansion in Hong Kong and Asia. Before the September Series A round, it had raised $6.1 million from private investors.

Online wine industry publications Wine Industry Insight and Dr Vino's Wine Blog were among the first to report on Vinfolio's move.