A proposed sale of Napa's center of food and wine is nothing more than a bid by the failed nonprofit's insiders to "divert assets" to a new venture to enrich themselves, lawyers for a creditor trying to block the deal contend.
Garry McGuire, president of Copia: The American Center for Wine, Food and the Arts, revealed in bankruptcy court filings that Copia has reached a deal to sell the center in downtown Napa for $28 million.
The prospective buyer is PSC Asset Management Inc., owned by Pacific Star Capital. The privately held Los Angeles real estate investment fund buys retail and office properties for between $15 million and $70 million across the country.
Copia would survive by leasing back half its current space and licensing its brand to an unidentified investment group, according to the center's bankruptcy filings.
In an e-mail to The Bee on Monday, McGuire said he believes that the creditor doesn't understand that licensing the Copia brand "would generate significant royalty payments for the not-for-profit."
Copia's big Napa complex is worth only $26 million to $30 million in today's market, McGuire noted, though it cost more than $56 million to build. Copia opened in 2001, financed by $78 million in tax-exempt bonds.
Louis Cisz and Matt Richards, attorneys for Copia's largest creditor, state in court filings that their client – bond insurer ACA Financial Guaranty Corp. of New York – was stunned by Copia's and McGuire's actions.
They argue that the proposed sale to PSC is not allowed under bankruptcy law, and that Copia should be put immediately into foreclosure.
ACA agreed to insure Copia's bonds and cover investor losses if it went bankrupt.
Cisz and Richards said ACA, while working with Copia, was in "advanced" talks with several potential buyers when Copia filed for Chapter 11 and revealed its own property sale, undercutting ACA's efforts.
They said Copia has defaulted on its bond payments, has never made money and has no hope of doing so. They called the promised deals nothing but "a Hail Mary plea."
McGuire's filing says Copia was still losing $150,000 a month before it filed for Chapter 11 on Dec. 1. Despite that, Copia agreed to pay PSC a $500,000 breakup fee if the sale collapses or another buyer emerges, filings show.
Neither ACA's attorneys nor PSC responded to messages seeking comment.
Call The Bee's Andrew McIntosh, (916) 321-1215.
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