Iowa’s first wine coop folds
Southern Hills Winery, which marketed itself as the state’s first wine cooperative, has shut down and filed to liquidate its assets under federal bankruptcy laws.
Located in Osceola near Terrible’s Lakeside Casino, the organization has 134 shareholders, many of whom had loaned the winery’s parent company, Iowa Wine Cooperative, several thousand dollars in recent years to keep it open. Southern Hills has been closed for about three weeks.
Some shareholders, who asked not to be identified, said the winery’s board had not responded to inquiries about its financial affairs.
According to court documents filed Tuesday, the cooperative had nearly $1.9 million in debts, including $1.5 million owed to Clarke County State Bank and $156,324 to the Iowa Department of Economic Development. In addition, the business owed liquor and wine taxes to the state and had an unpaid property tax bill.
Attorney Steven Reed, who filed the bankruptcy papers, said that after secured creditors, such as the bank, are paid from bankruptcy estate assets, “there is not a lot left” to pay shareholders and other unsecured creditors.
Iowa Wine Cooperative declared slightly more than $59,000 in assets, including an inventory of wine valued at $54,767.
Southern Hills Winery has lost $123,832 so far this year, after posting an operating profit of $47,000 in 2009. The winery lost nearly $86,000 in 2008.
The winery had a modern winemaking and bottling facility, and its grounds included a small demonstration wine grape vineyard.
During its eight years in operation, the winery had been criticized for its failure to hire a full-time manager familiar with the wine business. Many of the shareholders were farmers and other Southern Iowa residents who sold grapes to the cooperative from relatively small vineyards of 5 acres or less.