‘Falcon Crest’ Spring Mountain Vineyard in Napa files for bankruptcy

A historic Napa Valley winery owned by a secretive Swiss billionaire has filed for bankruptcy after becoming embroiled in messy legal battles.

Spring Mountain Vineyard, best known as the backdrop for the 1980s soap opera “Falcon Crest,” is a sprawling, sloping estate on the hillsides of west Napa with a winemaking history dating back to the 19th century. Its owner is Jacqui Safra, president of the Encyclopedia Britannica and member of the powerful Safra family, which operates a global banking empire.

By the time Spring Mountain Vineyard filed for bankruptcy last week, he was engaged in two separate fights in court. One involved an insurance company challenging Spring Mountain’s claim that it was entitled to $10 million after sustaining damage in the 2020 Glass Fire. The other involved a $185 million loan. dollars contracted by Spring Mountain Vineyard. After defaulting on the loan, Spring Mountain sued the lender in an attempt to prevent it from taking control of the winery.

Representatives for Safra and Spring Mountain Vineyard did not respond to requests for comment.

The Chapter 11 bankruptcy filing put an end to both of those sagas, at least for now. With the other procedures blocked, many questions remain unanswered. Not just on why a winery owned by a member of one of the world’s wealthiest families might file for bankruptcy – but on the value of historically significant wine brands in Napa Valley and the precarious nature of rebuilding venerable estates after natural disasters.

Spring Mountain Vineyard’s Elivette, which now sells for $160 a bottle, is its flagship wine.

Jason Henry / Special to the Chronicle

Like “Falcon Crest”, Spring Mountain Vineyard has all the trappings of a great story: drama, mystery, grandeur and celebrity.

The 845-acre property known as Spring Mountain Vineyard was once made up of four separate, adjoining properties, each of which played a significant role in the early years of the Napa Valley wine industry. One, called La Perla, was the site of the first vineyard planted by the Beringer brothers in 1882; they will then found the famous vineyards of Beringer.

A developer named Mike Robbins bought one such property in the 1970s and named it Spring Mountain Vineyard. From the start, the winery seemed to have a big break: its Chardonnay was one of the Californian wines selected to compete in the Judgment of Paris, the famous 1976 competition in which American wines were judged superior to their French counterparts.

But as business soared for other Judgment of Paris attendees like Chateau Montelena and Stag’s Leap Wine Cellars, Spring Mountain fell out of favor. “Wines have gone from strength to weakness,” wrote wine columnist Matt Kramer. Throughout the 1980s, he was better known for “Falcon Crest”, which filmed most of his outdoor scenes in the vineyards of Saint Helena, than for his Cabernet Sauvignon.

Robbins filed for bankruptcy and Safra purchased the property in 1992. The value was $5.5 million, according to the Los Angeles Times. Safra then purchased the three neighboring plots and combined them into a single estate. It’s the kind of terroir that would be the envy of any winemaker, with elevations reaching 1,000 feet and a variety of soil types. Wine Spectator reviewer James Molesworth called the vineyard “as complex a site as I have seen”.

Safra was never the public face of the winery, although he was always a very public figure in his other activities. In addition to his banking and investment activities, he owns the parent company of Encyclopedia Britannica and Merriam-Webster. He was the financial backer for several Woody Allen films and even had small roles in a few of them. Eventually, the partnership with Allen soured: in 2001, Allen sued Safra and his partner, Jean Doumanian, accusing them of deceiving him about the profits from the films they produced with him. They settled out of court.

Actress Jane Wyman, star of the CBS television series "Falcon crest," seen in 1986.

Actress Jane Wyman, star of CBS’s ‘Falcon Crest’ television series, seen in 1986.

CBS Photo Archive/CBS via Getty Images

After years of languishing, Spring Mountain Vineyard seemed to be staging something of a comeback over the past decade. His wines have garnered critical acclaim, and the White House served his Sauvignon Blanc at a state dinner with the Prime Minister of Australia in 2019.

Then, in September 2020, the Glass Fire ripped through Spring Mountain, decimating much of its infrastructure, including some structures dating back to the 1800s. “The flames and intense heat quickly swept through the entire property and essentially vaporized most of our historic buildings…quickly reducing them and our majestic forests to ashes,” winery president Constantine “Don” Yannias said in a letter to customers after the fire.

The total damage bill, which the winery would later claim in court, was over $35 million.

Many California wineries have struggled to find wildfire insurance in recent years. But Spring Mountain Vineyard had multiple insurance policies and collected about $7.7 million from several of them after the fire. He also had an excess policy — a secondary policy with a higher limit — with an Illinois insurer, Mt. Hawley, up to $10 million. Spring Mountain filed a claim for that amount in 2021. Last March, when Mt. Hawley failed to pay, Spring Mountain sued the insurer in Napa County Superior Court.

Mt. Hawley countersued, asking a judge to recognize that he is not obligated to pay. The insurer argued that it tried to investigate Spring Mountain’s claim for the $10 million, but the winery did not cooperate. He said the winery failed to make Yannias, who submitted the insurance claim, available for interviews. He also disputed that certain losses were covered by Spring Mountain’s insurance policy, such as the vine trellis and irrigation systems. Mt. Hawley did not respond to a request for comment for this story.

Proceedings in that case were delayed this summer after Spring Mountain claimed to have been the victim of a ransomware attack. Spring Mountain had filed a motion to dismiss the case before last week’s bankruptcy filings put it on hold.

A group tastes wine at Spring Mountain Vineyard in 2013.

A group tastes wine at Spring Mountain Vineyard in 2013.

Jason Henry / Special to the Chronicle

The dispute speaks to an ongoing tension in Wine Country: Insurers are increasingly reluctant to cover wineries in California’s wildfire-prone areas, and many wineries are using the types of policies that Mt. Hawley was proposing to Spring Mountain. Such policies can have very high premiums and sometimes come with conditions (such as Mt. Hawley’s requirement that any legal disagreements must be heard in the courts of New York, not California).

“If you look at Spring Mountain – no standard market is going to write zero-point policy,” said Nicholas Svetcoff, a broker at Burlingame’s Risk Strategies, referring to Spring Mountain’s high fire-risk terrain.

Meanwhile, Safra and his winery had engaged in a battle on another front, culminating in a lawsuit he filed last week to try to stop MGG Investment Group from taking over the winery.

Safra had taken out a $185 million loan from MGG in October 2018, according to court documents. As collateral, he offered a third-rank security of $75 million on his stake in the Britannica group. By the end of 2020, Safra’s lawyers wrote, he had not made payments on the loan. He and MGG entered into a forbearance agreement, in which MGG agreed to suspend payments until at least October 2021. To repay the debt, Safra, in exchange, would have to sell the cellar and wine inventory – 79,000 cases of bottles dating back to the 1979 vintage.

If he didn’t sell the winery then, he said he would sign the deed to MGG for a loan reduction of $125 million, plus wine inventory for $22 million, according to Safra’s trial. The two sides renegotiated part of the forbearance agreement afterwards, Safra’s lawyers wrote. MGG did not respond to a request for comment.

"The vineyard itself is an incomparable property, unique among all other vineyards in Napa Valley (and, indeed, the world)," wrote Spring Mountain Vineyard attorneys in a recent lawsuit.

“The vineyard itself is an incomparable property, unique from all the other vineyards in
Napa Valley (and, indeed, the world),” Spring Mountain Vineyard attorneys wrote in a recent lawsuit.

Jason Henry / Special to the Chronicle

In the lawsuit he filed last week, Safra said that although he had repaid much of the loan, the balance had grown to more than $192 million due to his 16% interest rate. .

Safra believes the $125 million value set by the MGG deal for the vineyard was far too low, according to the filing. An appraiser had valued the business at more than $204 million in 2020, and that was conservative, Safra’s lawyers wrote, pointing to the recent sale of nearby Joseph Phelps Vineyards for $725 million. The wine inventory alone, they said, is worth at least $164 million at retail. A broker had been working to find a buyer for the winery since March 2021, according to the lawsuit.

This dispute was also put on hold as soon as Spring Mountain’s bankruptcy paperwork was filed in Santa Rosa.

In this case, Spring Mountain estimated that its assets were worth between 100 and 500 million dollars. It estimated its liabilities in the same tranche. A list of creditors with unsecured claims includes winery president Yannias, who the form says he owes about $2.5 million. Other creditors include wine barrel makers, farm equipment vendors and the Napa County Treasurer. An insurance company in San Francisco, says the bankruptcy form, owes $1.8 million.

These complex developments underscore just how anomalous Spring Mountain Vineyard is among California vineyards. “The vineyard itself is incomparable property,” Safra’s attorneys wrote in the MGG lawsuit, “unique to all other vineyards in Napa Valley (and, indeed, the world).”

Esther Mobley is the principal wine critic for the San Francisco Chronicle. Email: [email protected] Twitter: @Esther_mobley

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