Specialist contract winemaker VinLink Marlborough is set to buy the Marlborough vineyards business of Sacred Hill Group, which is in receivership.
Sacred Hill Marlborough Vineyards owes the lion's share of the group's $98 million of debts and liabilities, with $69.1m in liabilities to creditors.
Westpac NZ, which called in receivers to the Sacred Hill group of companies in May, is the group's largest creditor, owed $52m.
Receivers Ross Logan and Andrew McKay of BDO Auckland said sale negotiations for the Marlborough business were under way with a small number of parties when they came on board. They had continued negotiations and entered an agreement with VinLink.
Settlement was expected shortly and the purchase price was confidential, said the receivers' report.
VinLink, equally owned by Gisvin Ltd and Links Winery, has been approached for comment.
VinLink, under an agreement with the receivers to reduce receivership and working capital costs, has been assisting with the management of the Sacred Hill vineyards during the Property Law Act notices process. The notices expired unremedied clearing the way for VinLink's purchase settlement.
VinLink's 50 per cent shareholder Gisvin is 20 per cent owned by Gisborne family orchard business DW Briant and 20 per cent by Gisborne's Crucible Wines with the balance held by two groups of individual shareholders.
VinLink's other 50 per cent owner, Links Winery is 75 per cent owned by AH Trustees of Christchurch.
Receivers were called in to Sacred Hill Vineyards by Westpac bank on May 6. They were subsequently also appointed receivers of Sacred Hill Marlborough Vineyards, Sacred Hill Family Vineyards and Sacred Hill Global Ltd.
Sacred Hill Vineyards was formed in June 1999 and operates a vineyard, winery, and processing and distribution business.
The company attributed its failure, and that of the group, to several issues, said the receivers.
In 2019 it was discovered the company's inventory level was materially overstated in its audited accounts.
The group had significant debt facilities with the bank, supported by general security agreements and cross-guarantees. The debt facilities had been advanced against the security of the overstated inventory, said the receivers.
On being advised of the overstated stock, the group decided to restructure and separate its Marlborough and Hawke's Bay operations, with a view to selling the Hawke's Bay operation to reduce debt. It tried to do this in 2020, but a conditional sale agreement fell through.
Other factors including a poor 2021 vintage, high NZ-US exchange rate and poor financial performance meant the group was reliant on the ongoing support of the bank to continue trading.
Following ongoing defaults, the bank decided in May to appoint receivers.
They noted related company Quench Collective, Sacred Hill group's New Zealand distributor, was put into liquidation on April 12 by its shareholder. It had debt of $3.1m.