Objections may scuttle Jackson wine purchase in McMinnville
By Nicole Montesano
This article originally appeared on (McMinnville) NewsRegister.com on Nov. 6, 2015.
Two parties have filed objections to Jackson Family Wines’ purchase of two mirror-image buildings in a set of three on the campus of the former Evergreen International Aviation.
A telephone auction for the buildings was held Oct. 23. Jackson, a California wine colossus that has been moving aggressively into Oregon, cast the winning bid of $4.6 million.
The objections were filed by the Air Line Pilots Association, which has a longstanding unpaid claim, and Rhodium Loan Servicing, which recently outbid Jackson for the third building in the set, which lacks any independent access.
In its objection, ALPA said it holds liens against the two buildings, located at 3500 and 3600 Three Mile Lane, one for $744,650 and one for $680,360. The union says its aim is not to block the sale, merely to ensure payment of the liens, awarded after Evergreen filed confessions of judgment admitting it owed substantial back pay and pension payments to former pilots.
Rhodium filed its initial objection Monday and followed up with a supplemental objection Thursday.
As part of a settlement Umpqua Bank reached with Evergreen Vintage Aircraft in EVA bankruptcy proceedings in U.S. District Court in Oregon, Rhodium says, it obtained a deed to the building and land at 3400 Three Mile Lane in September. The property was landlocked by the lots and buildings at 3500 and 3600 — subsequently won at auction by Jackson Family Wines — so the agreement included a requirement that Evergreen International Aviation, through its trustee in federal bankruptcy court in Delaware, provide an easement, it maintains.
Rhodium says Trustee Alfred Giuliano was a party to the Evergreen Vintage Aircraft settlement, and raised no objections to the easement in those proceedings. In fact, it asserts in its objection that he had worked actively to secure it.
As recently as Oct. 30, Rhodium contends, Giuliano provided assurance there would be no problem with the easement. But it says Jackson Family Wines is refusing to grant one, saying it is under no such obligation.
In a strongly worded response, Jackson accuses Rhodium of trying to hold it and the trustee “hostage.” It threatens to withdraw its purchase offer altogether over the issue.
Jackson argues it didn’t even learn of Rhodium’s desire for an easement until Oct. 30, several days after the auction, and would not have bid as much for the properties if it had.
If the court grants Rodium’s easement demand, Jackson Family Wines “reserves all of its rights ... (to) demand the immediate return of its deposit, as well as to petition the court for anew auction to be scheduled without delay, and furthermore, to seek money damages, specific performance and/or any other relief that may be available and appropriate under applicable law,” it says it its court filing.
Rhodium argues it is entitled to the terms granted to Umpqua Bank, and that until recently, the trustee had been in concert on that, but has now changed his stance.
“The trustee advised Rhodium for the first time on Nov. 4 that the trustee believes he is not bound by the Term Sheet or the Settlement Order, because he did not sign a settlement agreement after the Settlement Order was entered,” it says.
Rhodium is demanding binding arbitration, required under the settlement agreement, in front of Oregon bankruptcy judge and mediator Elizabeth Perris. A hearing on the issue has been scheduled for Nov. 11.
In a Nov. 2 filing, Jackson terms that “an effort to extract a windfall from the debtors at the expense of the debtors’ estates, creditors and Jackson Family Wines. Principally, the Rhodium objection is an attempt by a non-interested party to the debtors’ Chapter 11 cases ... to hold up a sale by the trustee to Jackson Family Wines unless and until either the Trustee or Jackson Family Wines grants Rhodium easements across the 3500/3600 property, which without question would depress the value of the property and materially impair Jackson Family Wines’ intended and future use.”
It contends Rhodium “knew the ... property had easement issues at the time of its purchase, obtained a bargain purchase as a result of the easement issues, and now is trying to extract a windfall ... based on vague language in the Vintage term sheet.”
If Rhodium desires, it argues, “Nothing prevents Rhodium from negotiating in good faith with Jackson Family Wines over an appropriate form of easement agreement, post-sale.”
In the filing, Jackson’s chief legal officer and executive vice president, Jeff Wesselkamper, says the wine company made an offer to Umpqua Bank for the 3400 property itself. He says it was told the “the property was to be sold ‘as is,’ and further ... that the property had ‘unresolved easement/access issues.’” It therefore believes Rhodium, which paid only $1.3 million for it, purchased the property under the same terms, he argues.
Giuliano also maintains Rhodium’s claims should be rejected. He argues, among other things, that “the language relied upon by Rhodium only states the trustee ‘will acknowledge an acceptable easement arrangement,’ which was never negotiated with the trustee nor approved by the trustee.”
In response to the union claim, he promises to “address issues raised by ALPA’s limited objection in advance of the sale hearing,” suggesting they can be resolved.