Underground Cellar Bankrupt, Owes Customers Millions in Wine


Underground Cellar, a San Francisco-based company, could easily be a wine lover’s dream: Customers could buy, store, and ship up to 500 bottles for free (also free) in the Napa Valley company’s “temperature-controlled CloudCellar.” whenever they wanted. Better still, the company worked directly with wineries to offer exclusive wine bottle “upgrades,” where weekly “deals” allowed members to buy, for example, a $25 Cabernet for a chance to upgrade to a $500 bottle of a similar wine.

However, many of Underground Cellar’s customers have been anything but grateful lately.

At the end of April, the wine company was abruptly discontinued ceased operationsand filed for Chapter 7 bankruptcy a few days later. The San Francisco Chronicle reported. Underground Cellar owes nearly $25 million worth of wine and other debts, and some former customers are now wondering if CloudCellar even exists.

Gregg Thatcher, a former customer, also runs one Facebook group is dedicated to discussing the current situation with Underground Cellar. It has almost 600 members.

“It’s just awful. Everyone feels robbed,” said Thatcher The San Francisco Chronicle. “People have built these huge collections and they don’t know what they’re going to do. It’s a huge loss for them.” He added that while he himself owes about $1,000 worth of wine, others owe hundreds of thousands of dollars, with one person saying they spent $200,000 on wine, which they no longer have access to.

Three days before Underground Cellar filed for bankruptcy, Erik Jensen filed filed a lawsuit against the company, accusing fraud and claiming to possess nearly $3,000 worth of wine, which he cannot retrieve.

Related: An 81-year-old is suing over an alleged scheme that resulted in her losing her three-decade home

According to the company’s bankruptcy filing, customers ordered $2.7 million worth of wine, but it never made it to stock.

The nature of Underground Cellar’s demise remains unclear. The company cites “recent market headwinds” and an “inability to secure funding” in an “increasingly difficult capital market” as reasons for its decision to file for bankruptcy.

“I have over $3,000 worth of wine in her cellar. What a scam. How can this be legal? I’ve tried calling and emailing but haven’t heard anything.” wrote one user in a Reddit thread about the Underground Cellar closing.

Though Underground Cellar reported sales of more than $20 million last year, only $100,000 in cash and $328,000 in bills remain owed, according to bankruptcy records The San Francisco Chronicle. In addition, the company lists physical assets worth less than $35,000.

“It’s ridiculous that the entire company supposedly doesn’t have any other assets,” Bradley Coppella, who said he spent more than $15,000 on wine with the company, told the outlet.

entrepreneur has reached out to Underground Cellar for comment.

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