Fox Creek Wines debts revealed as buyer sought for McLaren Vale winery by administrators

The huge debt pile amassed by SA’s Fox Creek Wines in the lead up to its collapse has been revealed, as administrators search for a buyer to save the business.

• McLaren Vale winery calls in administrators

A white knight is being sought to acquire McLaren Vale’s Fox Creek Wines, which owes major lender Westpac and other creditors close to $10m.

The company’s debts have been revealed for the first time after the company called in administrators on October 18.

In a report on company activities prepared by director Ben Gibson, Westpac is listed as one of three secured creditors, owed $2.6m, while around 130 unsecured creditors have been left more than $4.1m out of pocket.

Watts Securities and Commercial Finance Australia are listed as the two other secured creditors, with debts of $1.4m and more than $890,000.

Fox Creek Wines at McLaren Vale called in administrators in October.

Employees are owed more than $400,000, including more than $270,000 in unpaid superannuation.

Meanwhile selling agents have commenced a campaign to find a buyer to take over the business and assets, including brands, a cellar door, vineyards, 300,000 litres of bulk wine stored in barrels and tanks, 12,000 cases of unsold bottled wine and a wine club with around 5000 members.

The 12.2ha landholding on Malpas Rd includes 2.7ha of vines, which together with the cellar door, are valued at around $5.8m in Mr Gibson’s report.

Expressions of interest close on December 10.

The winery and associated holdings have been put on the market.

With the wine group’s other assets valued at around $2.5m, unsecured creditors are facing a significant shortfall in any dividends resulting from a potential sale of the business or liquidation process.

Administrator Tim Mableson from KPMG has been contacted for an update on his investigations into the company’s collapse.

At a recent meeting he told creditors the company’s owners – wine industry figures Ben Gibson, Jock Harvey and Dim Georgiadis – had faced a perfect storm of challenges since taking over the business in January 2021, including a failed deal to ramp up exports into the US market.

“Challenges have included global disruptions from Covid-19, reduced tourism visitation, tariff issues in the China market and then broader economic pressures, with increased costs across the business and more recently the cost of living having an impact on visitors to the cellar door and sales volumes generally,” minutes from the meeting say.

“Fox Creek’s export markets have been significantly impacted, in particular financial setbacks in the US, including a significant contract entered into in 2021 with a company that has subsequently gone bankrupt.”

Mr Mableson said significant losses resulted from the development of new products specifically designed for the US market, and more than 500,000 litres of bulk wine had to be sold at a deep discount due to the failure of the US contract.

Fox Creek Wines sold its winery at McLaren Vale in 2023 to help pay down debt, Mr Mableson said, but the cash flow squeeze proved an insurmountable challenge.

Mr Gibson, Mr Harvey and Mr Georgiadis acquired the award-winning Fox Creek Wines business from its founders just as Chinese authorities introduced hefty tariffs that crushed the industry for three years before they were lifted earlier this year.

The company was established in 1994 by Helen and Jim Watts, and has received numerous awards over the years, including being recognised in the “outstanding” category of the prestigious Langton’s wine classification for its flagship Fox Creek Reserve Shiraz.

Russell Iles from Woodbridge Iles Property is selling Fox Creek Wines on behalf of administrators.