A high-profile Nelson winery has been tipped into receivership as its owner fights a lawsuit from a Las Vegas executive who allegedly threatened to bury him in the Nevada desert and kill his three show dogs.

Mahana Estates Winery, at Upper Moutere, was on the market but has asked its bank to appoint a receiver after a buyer failed to meet their first payments on a purchase.

Mahana, which hosted Prince Charles and the Duchess of Cornwall during their 2015 visit to New Zealand, has pinot noir, pinot gris, riesling, chardonnay, and sauvignon blanc grapes, as well as a winery, restaurant, and an upmarket guest lodge.

But Mahana's director, Glenn Schaeffer, confirmed the bank will appoint KordaMentha as receivers, his local lawyer Rick Farr told the Herald.

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Farr said it was hoped that a further proposal for sale to an overseas interest would continue to be pursued.

Farr said the business had been hit by the lawsuit Schaeffer is facing and "that it became impossible and impractical to continue".

For the past three years, Schaeffer has been battling a High Court lawsuit bought against him by James Murren and Daniel Lee.

The function centre is a feature of Mahana Estates vineyards in Upper Moutere. Photo / Supplied
The function centre is a feature of Mahana Estates vineyards in Upper Moutere. Photo / Supplied

Murren is chief executive of MGM Resorts International, a multi-billion dollar Las Vegas hospitality business, while Lee is also the boss of a casino company in the same city.

Murren and Lee, in court documents, say they and others discussed forming a partnership with Schaeffer in 2002 that would own a vineyard and winery.

They say Schaeffer, who formerly headed the Mandalay Resort group in the US, sought capital contributions from them for the proposed partnership and when doing so either stated or implied that they were part-owners of the Woollaston Estates Vineyard, which later changed its name to Mahana.

They allege that Schaeffer, after 2008, made further representations to them that they were part owners of a vineyard and winery in New Zealand.

Mullen says he and his trust have personally paid Schaeffer US$1.6 million while Lee says he paid US$700,406.

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Mullen and Lee allege the representations made to them were false and say the payments they made were not used to make the investments promised but instead for the assets he holds as a shareholder of New Zealand company Woollaston Estates Holdings.

The pair's case alleges the representations breached the Fair Trading Act, that Schaeffer breached a duty of care he owed and that he knew the representations were false.

A 10-day hearing for the case is scheduled to begin next month.

Schaeffer, however, has made several bids this month to halt the action or delay it.

He alleges that last year, during a mediation to try to settle the dispute, Lee threatened him.

"He knew where I lived, knew where my family lived and knew where my dogs lived," Schaeffer claimed.

"He said if I did not give him back his money that he would bury me in the desert like in the old days, he would destroy my children's lives and bankrupt my ex-wife and travel to Omaha to kill my three show dogs. He ended his threats with the words 'give me my f***ing money'," Schaeffer alleged Lee said.

Lee disputes Schaeffer's account.

While he told Schaeffer that Las Vegas gaming executives in the "old days" might have ended up buried in the Nevada desert, after saying this he claims he pointed out that things were done differently now and he had come to the mediation to settle the lawsuit.

He denies threatening Schaeffer's family or show dogs and Murren supports Lee's recollection of what was said.

A stunning view over vineyards at Mahana Estates. Photo / Supplied
A stunning view over vineyards at Mahana Estates. Photo / Supplied

Schaeffer applied to put a halt on the lawsuit on the basis that the alleged threats meant he could not adequately defend the proceedings and was unfairly constrained because he feared repercussions.

However, the Court of Appeal yesterday refused another bid to stop to the proceedings, with Justice Stephen Kos saying Schaeffer's concerns "do seem somewhat hyperactive".

"I would have thought in many respects he's safer now than otherwise."

If Schaeffer was to "run into trouble" in the desert, police would have a strong line of inquiry to follow, Justice Kos said.