The Chapter 11 trustee for Kelham Vineyard & Winery LLC has filed a motion seeking court approval to sell the remaining assets of the bankrupt Napa Valley winery to insiders for $1.2 million in a deal aimed at resolving extensive litigation between family members and related entities.
In court documents filed on April 24, 2025, with the U.S. Bankruptcy Court for the Northern District of California, trustee Michael G. Kasolas outlined a proposed agreement to sell the estate's remaining assets to the "Kelham Parties" - including former members Susanna Kelham and Hamilton Nicholsen - for $400,000 in cash plus the release of approximately $800,000 in claims against the estate.
"Trustee has weighed the potential benefit of pursuing the above-described litigation and of reorganization against the risk and cost of doing the same and determined that a resolution of claims is appropriate under the circumstances," the motion states.
The bankruptcy case began when an involuntary Chapter 11 petition was filed against Kelham Vineyard & Winery on July 20, 2023. The court entered an order for relief on August 16, 2023, and appointed Kasolas as trustee on September 13, 2023. Since then, the case has been mired in litigation between the estate and the Kelham Parties, including disputes over a property lease, ownership of personal property, and various claims.
The assets to be sold include personal property, books and records, permits and licenses, rights under a lease for property at 360 Zinfandel Lane in St. Helena, claims against the Kelham Parties, litigation rights, and real property located at 540 Mund Road. Notably, the sale excludes certain claims under Chapter 5 of the Bankruptcy Code, claims against Terra Valentine, and a trademark registered in 2005.
The proposed sale represents a comprehensive settlement of numerous disputes, including litigation over a lease that the trustee believes could potentially be worth more than $10 million but would require "significant litigation, likely including multiple appeals." The agreement would resolve eight pre-petition claims filed by the Kelham Parties totaling more than $2.7 million and various administrative claims, including property tax claims of $91,860.76.
"Due to the uncertain value of these claims, Trustee is relying on the overbid and auction procedures to facilitate the sale process and maximum value," the motion explains.
The sale is subject to higher bids, with a minimum overbid set at $1.3 million in cash plus indemnification of the estate against lease-related litigation risk. Any overbidder must secure up to $500,000 of the indemnification with a letter of credit or other acceptable accommodation. The auction is scheduled for June 3, 2025, at the U.S. Bankruptcy Court in Oakland.
Kevin Otus of Onyx Asset Advisors, LLC, which was approved as the estate's sales agent in April 2024, has been marketing the assets. The previous attempt to sell all assets for $4.25 million failed when the court did not approve a breakup fee. In October 2024, the trustee successfully sold the wine assets for $2,035,914.
"Trustee believes that all potentially interested purchasers have been reached or will be reached by the overbid opportunity marketing efforts," according to the motion.
If approved, the sale will end a contentious chapter in what the trustee described as a "dispute between family members." The motion notes that the various claims being resolved are "numerous, interwoven, and built upon a contentious family dispute."
The agreement includes mutual releases, with the Kelham Parties waiving all known and unknown claims against the estate, the trustee, and his professionals. Within 30 days of court approval, the parties would dismiss all pending adversary proceedings, contested matters, and appeals, except for litigation related to trademark rights.
The case is being heard by Judge William J. Lafferty III, with the trustee represented by attorneys Mark S. Bostick and Lisa Lenherr of Fennemore LLP.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of a 27 page court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.