More than a million bottles of wine from the failed Australian investment company Heritage Fine Wines (HFW) are to be released to the market.
At the same time the administrator has indicated criminal charges may be brought against former directors.
Sales will begin around Christmas. Receiver Nicholas Crouch, of Crouch Insolvency, expects the sale process to take around two years.
HFW, set up in Sydney by UK-born Simon Farid in 1999, collapsed in 2005.
Around 3,000 investors, including former New South Wales State Premier Nick Greiner, had poured AU$70 million into the business, hoping to cash in on the American-led craze for ‘cult’ Australian wines.
Finding it difficult to source enough investment-quality wines, HFW began to sell lesser-known wines, and commissioned winemakers to create new products.
A crisis in market confidence coupled with a fall in cult wine prices triggered the company’s collapse in March 2005. More than 1.4 million bottles were left in storage.
When Crouch took over he discovered up to 300,000 bottles unaccounted for—including valuable Penfolds Grange.
‘Some 900 investors took approximately 300,000 bottles home to consume or sell,’ says Crouch. ‘This left approximately 1.1 million bottles.’
Criminal charges may be laid against the former directors if it is discovered the company traded while insolvent before it called in administrators.
Now Sydney-based Blue Hills Liquor has agreed to buy HFW’s storage business for AU$700,000. The wines will be sold gradually over two years, to avoid flooding the market.
Some 2000 remaining creditors will be paid monies owed, after warehousing, legal and other costs have been deducted.
‘The wines that will do well have a track record, like Mt Langi Ghiran Shiraz, so there might be some downward [price] pressure there,’ Andrew Caillard of Langton’s Fine Wine Auctions said.
HFW invested in around 360 different wines, including labels like Balnaves, Barossa Valley Estate, d’Arenberg and Fox Creek, as well as in small quantities of Penfolds Grange and Henschke Hill of Grace.
A third of the wines are own-label brands, although made by well-known winemakers, like Ben and Colin Glaetzer’s Nefertari Barossa Valley Shiraz 2002. There is also an unknown quantity of white wines that may now be undrinkable.
‘Most of the stock they’re talking about is aggregated, middle-of-the-road Australian wine that comprises pseudo-cult wines,’ Caillard said. ‘This debacle highlights the fact that the fine wine investment market here is not mature, and that opportunities are limited.’
According to UK website investdrinks.org, Simon Farid has been on the UK Financial Service’s Authority’s Prohibited Individuals List since March 1996, meaning he is ‘prohibited from performing any function in relation to regulated activities which correspond to investment business’.
Written by Felicity Carter
