Gundlach Bundschu Winery, one of California’s oldest wine producers, has sought bankruptcy protection while carrying almost $40 million in debt, adding to the growing list of victims caught in the state’s deepening wine-industry crisis.
After almost 170 years of surviving upheaval, the historic Sonoma winery is now battling a combination of heavy borrowing, weaker tourism and a sustained drop in consumer demand for wine.
The sixth-generation family enterprise began in San Francisco in 1858 and endured Prohibition, a major earthquake, devastating wildfires, a destructive vine pest and the disruption caused by the Covid-19 pandemic.
Even that long record of resilience could not prevent the company from filing for Chapter 11 bankruptcy, following years of unsuccessful efforts to stabilize its finances.
Gundlach Bundschu’s winery and visitor operations are expected to continue during the restructuring. The family is also looking for an outside investor, a step that would reduce the Bundschus to a minority stake in the business.
Chief executive Jeff Bundschu said the bankruptcy filing represents an entirely new experience for a family that has guided the winery through generations of historic challenges.
“The company has endured more than a century-and-a-half of historic challenges and transformational change; however, this Chapter 11 filing is unprecedented for our family and our company,” he wrote in court documents.
“We enter this process with great humility and remorse for the burden the company’s financial distress places on our employees, vendors, lenders, customers and community.”
Katie and Jeff Bundschu, owners of Gundlach Bundschu Winery, have announced a Chapter 11 filing after nearly 170 years of family ownership
Gundlach Bundschu’s scenic Sonoma vineyards are part of the historic California winery now seeking bankruptcy protection
Bankruptcy court filings estimate the company’s total liabilities at approximately $39 million.
The winery’s financial collapse highlights the broader strain facing California’s renowned wine sector, where producers are confronting lower wine consumption and a decline in visitors to Wine Country.
The filing follows the recent decision by McManis Family Vineyards to list its roughly 3,500-acre holdings across San Joaquin and Sacramento counties for tens of millions of dollars as the industry downturn continues.
According to the San Francisco Chronicle, Gundlach Bundschu’s financial troubles were intensified by a major expansion launched just before a series of damaging events struck.
In February 2020, the company purchased a 60-acre property in Glen Ellen for Abbot’s Passage, a separate label established by sixth-generation family member Katie Bundschu.
The acquisition was completed just before pandemic restrictions brought tasting-room visits and hospitality revenue to a near standstill.
Court filings identify the borrowing tied to that purchase as the “immediate cause” of the winery’s financial crisis.
“The growth required to support that investment did not materialize,” the filing says. “The industry’s subsequent contraction magnified those challenges.”
CEO Jeff Bundschu said the bankruptcy filing is without precedent in his family’s long history running the winery
The Sonoma winery produces about 42,000 cases annually, but rising debt and the wider California wine slump have placed its future under pressure
Abbot’s Passage finally closed its winery and tasting room earlier this year.
Katie Bundschu said at the time that the family wanted to ‘return to our roots and focus on Gundlach Bundschu.’
Over the past 18 months, Gundlach Bundschu slashed costs and went through ‘multiple rounds of layoffs,’ according to court filings, cutting its workforce from 102 people to just 63.
The family also sold significant real estate holdings outside the company and pumped the proceeds back into the struggling winery.
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The company has four loans with two major secured lenders, including approximately $20 million owed to agricultural asset manager Tiverton. That loan carries a huge 14.75 percent interest rate.
Another roughly $17 million is owed to agricultural lender American Ag Credit, while approximately 120 vendors and service providers are owed another $1.7 million in unsecured debts.
The family attempted to find a buyer or new investor and received three offers that its management considered viable.
But lenders rejected them because the offers came in ‘well below the secured debt amount,’ according to court filings.
Gundlach Bundschu will continue operating its winery and tasting room during the bankruptcy process as the family searches for an investor to help secure its future
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Facing mounting pressure and unable to reach an agreement with its creditors, Gundlach Bundschu turned to Chapter 11.
Bundschu said the bankruptcy followed ‘years of operational restructuring, cost reductions, asset rationalization, family capital contributions’ and negotiations with lenders.
But ‘those efforts did not produce a consensual, out-of-court solution,’ he said.
Court filings say a prospective investor and operating partner has already been identified, although their identity has not been disclosed.
The family says the restructuring is intended to give the 168-year-old business a chance to survive while protecting jobs and relationships with customers, suppliers and the wider Sonoma community.
‘This is about creating a fair, court-supervised process that gives this historic business an opportunity to survive, preserve jobs, protect relationships with customers and vendors, and ensure the winery remains a meaningful part of the Sonoma Valley community,’ Bundschu said.
The vineyard has triumphed over adversity throughout its long history.
In the 1870s, phylloxera, an insect capable of destroying entire vineyards swept into California. Gundlach Bundschu became the first winery to switch to resistant native rootstock.
The San Francisco earthquake of 1906 was also catastrophic. The fire that followed destroyed the winery, three Bundschu family homes and one million gallons of wine.
The family then moved operations to its Sonoma Valley estate, Rhinefarm.
Prohibition in the 1920s and 30s dealt another devastating blow. The winery was forced to close but the family managed to retain 130 acres and its home.
The winery was finally resurrected in the early 1970s but disaster came once again with the devastating wildfires of 2017.
The family’s century-old home was destroyed. Katie Bundschu said her parents escaped ‘with just the clothes on their back’ and a handful of keepsakes.
The reconstructed home was later put up as collateral for the winery’s debt.
Today, Gundlach Bundschu owns approximately 100 acres, produces about 42,000 cases of wine annually and welcomes around 30,000 visitors.
At its height, more than 75,000 people visited each year.
