Details In Bankruptcy Of California's Oldest Family Winery: Report

SONOMA VALLEY, CA — A day after news of a shocking potential bankruptcy of California's oldest family winery, details are now emerging about how a sixth-generation icon came to the precipice of losing the business that is synonymous with Wine Country.

An ill-timed, debt-financed acquisition just before the 2020 pandemic has driven California's oldest continuously family-owned winery into bankruptcy court, according to reports.

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Gundlach Bundschu borrowed to open a second winery just before the pandemic.

Six years later, the deal has helped push the Sonoma Valley business into bankruptcy court, where its family may lose majority ownership, according to reports.

Jeff Bundschu runs the business, registered as Vineburg LLC, with his sister, Katie Bundschu Tynan

Bundschu Co. filed for Chapter 11 bankruptcy on Sept. 23. The family expects to retain a minority stake if a deal with a new investor goes through, the Press Democrat reported.

That deal would end the family's majority control of Gundlach Bundschu and could cost the winery its designation as California's oldest continuously family-owned winery.

The financial strain traces in part to 2020, when the company took on debt to acquire a 60-acre winery and vineyard operated by Valley of the Moon Winery in Glen Ellen, according to reports.

The family converted the property into a home for Abbot's Passage, a wine brand Katie Bundschu founded in 2016, according to reports.

The pandemic followed, and a prolonged downturn in wine sales made the debt harder to carry.

Abbot's Passage closed its winery and tasting room on June 28 and stopped retail sales in July.

The family expects to close the Glen Ellen facility in early October. Katie Bundschu Tynan previously told the Press Democrat that the family would sell the Abbot's Passage acreage, though the bankruptcy could affect that plan, according to the San Francisco Chronicle.

The drop in broader wine market sales has added pressure.

Bundschu Co. responded with cost cuts and layoffs.

"The decision to commence this case was not made lightly," CEO Jeff Bundschu wrote in a declaration supporting the filing, reported in the Press Democrat and Chronicle.

He said the family had contributed capital, negotiated with lenders, and sought investment or a sale but could not reach an agreement outside court, according to the Press Democrat.

A deal with the potential investor could keep the winery operating while changing who controls the business the Bundschu family has run for six generations.

MORE: Bankruptcy Threatens Gundlach Bundschu, CA's Oldest Family Winery: Report