A federal bankruptcy court judge has blocked attempts by a nonprofit wine and food center in Napa to secure a $2 million emergency loan and stay open while it tries to reorganize $80 million in debts.
The decision by U.S. Bankruptcy Court Judge Alan Jaroslovsky effectively means Copia: The American Center For Wine, Food and the Arts won't reopen soon – if ever.
Instead, it will stay closed and its programs will likely be canceled, chief executive Garry McGuire says.
"The organization will wind down and be dissolved eventually," McGuire said in an e-mail to The Bee. "There are no funds to pay employees, lawyers or PR firms."
Copia's operations were suspended Dec. 1 when the non-profit filed for Chapter 11 bankruptcy protection from creditors, but it had hoped to re-open.
Copia did obtain a potential $2 million loan from Charter Oak Bank, but the Napa lender wanted its debt to be secured ahead of bond investors who lent $78 million to Copia to build its 12-acre complex, which opened in 2001.
Copia's tax-exempt bonds were insured in case the non-profit ever went bankrupt.
Copia also has an additional $2 million in debt.
The bond insurer, ACA Financial Guaranty Corp. of New York, faces a large shortfall between the market value of the property and Copia's other assets, and the $78 million owed to bond investors.
For that reason, ACA rejected Copia's attempt to place the bank loan ahead of its own existing debts – and it was backed by the judge.
Lawyers for ACA have indicated the insurer wants to begin foreclosure proceedings immediately, after accusing Copia insiders of trying to enrich themselves at the expense of bondholders with a bankruptcy filing and proposed $28 million building sale. That deal is now unlikely to proceed.
ACA lawyers declined to comment.
Call The Bee's Andrew McIntosh, (916) 321-1215.
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