‘It’s a new world now’: Why more California winery bankruptcies and foreclosures are coming

This past week, we saw two of the biggest stories yet in the wine industry’s ongoing crisis: Napa’s Signorello is facing foreclosure, something that rarely happens to wineries, and Gundlach Bundschu, one of California’s oldest wineries, has filed for bankruptcy. 

These stories are particularly sobering because both wineries are family-owned-and-operated and proven survivors: Signorello of the 2017 wildfire that destroyed its winery, and Gundlach Bundschu of myriad challenges throughout its nearly 170-year history — phylloxera, Prohibition and two fires, for starters. Signorello had recently opened one of Napa Valley’s most impressive wineries, and Gundlach Bundschu seemed to be doing everything right to attract new wine drinkers: The winery’s pricing is affordable; its branding is fun and approachable (music festival!); and it prioritizes sustainability, employing a team of resident animals to graze its land. So, I imagine some winery owners are now asking themselves, “If they can’t make it through this downturn, how will I?” 

The wine industry can take some comfort in the fact that the cause of Signorello and Gundlach Bundschu’s financial distress is more complicated than oversupply and declining alcohol consumption. Still, their stories share a couple of themes — unfortunate timing and unyielding lenders — which suggests that more winery bankruptcies, and even foreclosures, lie ahead. “I think this is just the beginning,” Signorello owner Ray Signorello said. “At the very least,” he added, his predicament “could be a big warning sign for a lot of people that are facing a similar situation.”

Both wineries pin the start of their struggles on what turned out to be poor timing, as they each took on significant debt — tens of millions of dollars — during a period of steady growth for California wine. Signorello’s loan, approved in 2018, helped finance the rebuild of his winery (much bigger and much fancier) after the fire. Gundlach Bundschu took out a loan in 2020, just before the pandemic, to purchase a 60-acre winery estate for Abbot’s Passage, an offshoot brand designed for millennials. The purchase was “intended to create a platform for long-term growth,” Gundlach Bundschu chief executive officer Jeff Bundschu wrote in the winery’s bankruptcy filing. 

During the years leading up to the wine downturn, banks readily granted loans, enabling wineries across California to invest in their future by building multi-million-dollar visitor centers, acquiring vineyard land, increasing production and more. Then the pandemic brought hospitality to a standstill, wildfires destroyed much of the 2020 vintage and the market entered a sharp multi-year decline. Construction costs rose while tariffs drove up production costs. As a result, dozens of California wineries like Signorello and Gundlach Bundschu are likely struggling to pay off debt they incurred only half a decade ago, when the future looked much more promising. 

“Many wineries financed long-lived assets and working capital during a period of stronger demand and appreciating property values,” Bunschu wrote in court documents. “When operating earnings fall, leverage can become unsustainable even if the nominal amount of debt does not materially increase. Valuable land, facilities, inventory and brands may then be attached to businesses that cannot service historical debt from current cash flow.”

Signorello and Gundlach Bundschu both also blamed some of their undoing on the aggression and obstinance of their lenders. Combined, the two wineries owe American Ag Credit, a borrower-owned cooperative that finances agriculture businesses, more than $50 million. Ray Signorello said he had to repeatedly increase his loan and that American Ag Credit raised his interest rate from 4.75% to 12.6% over six years. In a press release, Gundlach Bundschu, which has two major secured creditors, claimed its lenders wanted to extend the company “millions of dollars more” at an “onerous cost of capital.” Gundlach Bundschu’s largest loan, which was purchased by asset management firm Tiverton in 2023 from another bank, carried an interest rate of 14.75%. According to an annual report from wine industry mergers-and-acquisitions advisory firm Azur Associates, starting interest rates for wine industry loans have jumped from below 4% in 2021 to between 6% and 8.5% in 2026. 

When the wineries ran out of options — the Bundschu family reduced its staff by nearly 40%, sold non-company real estate and put their family home up for collateral — Signorello and Gundlach Bundschu hired firms to help them find a partner or buyer. Both received offers that they said were competitive for the current market value, but the offers were rejected by their respective lenders for being far less than the amount of debt owed. As a result, Gundlach Bundschu filed for bankruptcy (and will likely have to give up majority ownership through the restructuring process) and Signorello is scheduled to be auctioned off on Oct. 2. 

Any California winery with significant debt — especially debt that extends beyond their winery’s current value — could be facing a similar fate. Mike Fisher, the founder of Global Wine Partners, a mergers and acquisition advisor for the wine industry, said lenders typically “try to do their best to work it out” with borrowers and that in the past, creditors have largely avoided winery bankruptcies or foreclosures. But “it’s a new world now,” he said. “I don’t think anybody has an idea when this whole thing is going to get better. If I’m a banker, and I’ve got a loan that is underwater, then I’ve got a real problem.”

Mario Zepponi, a mergers and acquisitions expert and managing director for BMO Capital Markets, warned that the current market “is overly taxing of lenders’ patience — much more than what we’ve seen in another downcycle.” Zepponi and Fisher said the difference is that this downturn isn’t just tied to temporary oversupply or other macroeconomic factors; it’s the first downturn driven by declining demand. 

Banks aren’t just putting more pressure on borrowers, they’ve also changed how they do business with the wine industry. Pat DeLong, founder of Azur Associates, said that historically, banks loaned wineries money based on assets, like the value of land or inventory of premium aging Cabernets. But those values “are coming down,” and banks have switched their underwriting focus to cash flow, he said. They’re now looking for “proof of repeatable cash flows and inventory liquidity.” Both are hard to come by in the current market. 

“Historically when premium wine was growing, inventory was a real asset,” DeLong said. “Now, in this new reality, inventory can be more of a liability, especially if there’s more inventory than there are customers.”

In the past, a sale was the worst-case scenario, but that’s become more challenging than ever. Most of today’s buyers are coming from outside the industry, Fisher said, noting that the conglomerates that dominated the acquisition space in the past decade aren’t buying — they’re downsizing. “If you look at the people who bought wineries in the last 10 years, none of those groups are really active at all.” he said. According to Azur’s report, significant U.S. wine mergers and acquisitions from 2021-2024 averaged $2.6 billion in value; that value dropped 40%, to $1.5 billion in 2025. Today’s buyers are “very deliberate and very strategic,” DeLong said, and they’re only buying “at the right price and on their terms.”

With few buyers and declining asset values, bankruptcy and foreclosure, once a rarity, are the new last resorts for California wineries.