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Receivership leaves growers in the dark
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Four weeks ago, receivers and managers took over the running of Neqtar Wines Pty Ltd, but growers who sold fruit to the company this year remain in the dark as to the possibility of receiving further payments.
The receivership has meant 110 growers in the Murray Valley are owed nearly $4 million. They had received one payment from the company before the appointment of receivers, amounting to 35% of what they were due.
Since being advised of the receivership by letter on Friday 19 June, growers have not received any more news from the receiver.
Murray Valley Winegrowers (MVW) has been told by the receiver that the focus has been on selling Neqtar Wines as a going concern and this remains the strategy.
“The receiver’s main responsibility is to secured creditors, those parties that hold some form of security over Neqtar,” MVW chief executive Mike Stone said.
“Growers, along with other suppliers, are unsecured creditors and with the company in receivership any payments due to them are effectively frozen.
“Even if a buyer is found for Neqtar Wines, growers should not assume they will then receive outstanding payments,” Stone said.
Mike Stone said the collapse of Neqtar Wines highlights the vulnerability of growers as unsecured creditors.
Concerns over the financial position of several wineries were raised by MVW early this year when they were buying grapes while still making payments to growers for fruit supplied in 2008.
This concern prompted MVW to write to the Ministers of Agriculture in Victoria and New South Wales, asking the State Governments to legislate to prevent wineries from buying grapes if debts to growers from the previous season remained outstanding.
Despite legislation of this sort existing in South Australia, the Victorian government rejected the suggestion and after more than four months the NSW Minister still hadn’t replied.
As promoted previously by MVW, a Retention of Title (RoT) clause in grape sale and purchase agreements could provide some protection if the buyer failed to meet payment terms.
As growers usually are unsecured creditors, their claim on any assets of a failed wine business is ranked behind those of secured creditors, which can result in growers receiving little or nothing of what they’re owed.
However, a properly drafted RoT clause could result in the grower maintaining title to the fruit until payment is received in full.
“This is a complex issue because the fruit has been made into an entirely different product, which most likely has been blended with wine made from other growers’ fruit,” Stone said. “Because of this complexity it is very important for growers to obtain appropriate professional advice on the drafting of a RoT clause.”
MVW has had a RoT clause prepared that is available to winegrape growers in the Murray Darling and Swan Hill wine regions.