Collectors secure liquidation of hurricane-hit New York wine storage firm
- Wednesday 8 January 2014
Storm surges from Hurricane Sandy flooded large parts of lower Manhattan in October 2012
A New York court judge has ordered embattled wine storage group WineCare to be liquidated under Chapter 7 of US bankruptcy law, following a legal petition filed against the firm by several of its 380 customers.
The move is the latest development in a running legal battle between WineCare and its clients, who have been trying to ascertain the condition and whereabouts of their wines since Hurricane Sandy swept through New York City in October 2012.
Now that a court has appointed a trustee to liquidate WineCare's assets, there is hope that stocks can be located.
Thousands of cases of wine, worth milions of dollars, have yet to be returned, according to Gary Kaplan, a lawyer representing some of WineCare's customers. 'There are some very expensive wines,' he told decanter.com, adding that his clients were fed up with 'a lack of transparency'.
During Hurricane Sandy, flooding from storm surges knocked out WineCare's computer systems and wiped a database identifying its 27,000 cases of stock. Although the firm said 95% of the wine was undamaged, because it had been moved to higher floors, it said that it needed to re-scan each case.
But, some clients complained that WineCare was not keeping them informed and, in January 2013, several of them filed lawsuits demanding access to the firm's cellars and a collective $4m in damages for 'wrongful retention' of their property.
Shortly afterward, WineCare filed for Chaper 11 bankruptcy. According to the court document filed, this was partly to block clients gaining 'intrusive and unauthorised access' to its premises and partly because Hurricane Sandy had a 'devastating effect' on the group's business.
A group of clients responded by hiring Kaplan to file for WineCare's liquidation. 'We were happy to get the case converted to Chapter 7,' he said this week.
Regarding the return of the wine, he added, 'due to the magnitude of the task, the process will take some time, but we think that process will start very quickly'.
WineCare's customers are believed to include hedge fund manager Donald Drapkin and restaurateur Keith McNally. The Romanian Government also had wine stored there, according to the New York Times.
WineCare's founder and CEO, Derek Limbocker, could not be reached for comment by decanter.com. Calls to WineCare's New York office went unanswered. 'There is no room to record your message,' the answer phone said.