The wine company claims it has more than $70 million in debts but only $7 million in assets, most of it wine, and leaves nearly 1,000 customers in the lurch.

Update 1/19: The FBI is now fielding customer complaint calls about Premier Cru after the Alameda County District Attorney’s office asked it to intervene, according to spokesman Prentice Danner. That does not mean the FBI has launched an investigation into the workings of Premier Cru, he said. The number to call is 510-808-2600.

Original story:

The customers of Berkeley’s Premier Cru who were hoping to get deliveries of wine they paid for but never saw are probably out of luck.

The wine company run by John Fox filed for chapter 7 bankruptcy on Jan. 8, claiming it had more than $70 million in debts but only $7 million in assets — most of it wine.

The city of Berkeley is one of the entities that might get left in the lurch. Bankruptcy court filings show that Fox — doing business as Fox Ortega Enterprises — owes the city $175,000, although the papers do not state why. Fox also owes money to the IRS, the Franchise Tax Board and California’s Employment Development Department.

But the vast majority of those to whom Premier Cru owes money are the customers who put their faith in the wine store, which for years enjoyed a good reputation as a place to get fine, often hard-to-find wine at a good price. Many customers used Premier Cru to buy wine “futures,” which meant spending their money to buy wine that was still aging in barrels in France or Italy.

Last year, 11 customers, many of them wealthy individuals from Asia, filed lawsuits against Premier Cru, Fox, and his partner Hector Ortega, claiming they had never received wine they had paid for. At the time, Fox told Berkeleyside that those suing did not fully understand how the system worked.

“Most of these, or all of these, are from people, mostly Asians, who are relatively new customers who are not used to the extended length of time for delivery,” said Fox in October. “They are feeling insecure because they are not from the area. I think they are reacting to that insecurity and I can’t blame them for it.”

Since then, Fox has declined to comment on his business.

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The bankruptcy filing lists 958 named creditors from all over the world, including people from Canada, Thailand, Hong Kong and elsewhere. (The named list in the file available online only shows the first 241 of 3,050 pages of named creditors.) The vast majority, however, are from the United States. Premier Cru owes them varying amounts, from as little as $39 to hundreds of thousands of dollars, according to the bankruptcy papers.

Some of those who are owed money include savvy wine collectors. Arthur Patterson of the venture capital firm Accel Partners, who has one of the world’s best wine cellars in Big Sur, is owed $836,000, according to court documents.

The company does not expect to be able to repay any of those customers, according to court documents. In a Chapter 7 bankruptcy, a business is liquidated and the proceeds from any asset sales are distributed to the creditors. The huge gap between assets and debts for Premier Cru means most creditors will see little or nothing following liquidation. In addition, virtually all of the customers named are unsecured creditors, which means their claims will be fulfilled after secured creditors.

Most of these customers purchased wine through Premier Cru’s website. Fox operated a retail store at 1011 University Ave., but he closed it in December. The property, which includes a number of lots, is for sale for $6.8 million; Fox owes $270,000 in back-taxes on the property.

Fox did manage to pay his San Francisco-based attorney, Stephen D. Finestone, $17,500 for nine days worth of work in December. Finestone did not return Berkeleyside’s request for comment.

According to the filings, Premier Cru had gross revenues of $19 million in 2015. It also lost about $2,500 in theft when someone came into the store and said he was picking up wine for a client, according to the papers.

A few days ago, one of the companies that processed Premier Cru’s credit cards filed a lawsuit against it in state court, alleging fraud, according to Wine Spectator magazine. The credit card company said it was owed $228,500 for refunds it had made to customers who had not gotten the wine they ordered. The lawsuit said Fox signed refund checks he knew would bounce to obfuscate the trouble he was in, according to the magazine.

Related:

Shop Talk: The ins and outs of Berkeley businesses (12.22.15)

Berkeley store sued for not delivering $3M worth of wine (10.29.15)

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