Financial Squeeze Forces Tank Supplier Sierra Stainless Steel to File for Bankruptcy Petition
Sierra Stainless Steel, a supplier of stainless steel tanks for wineries, has filed a voluntary petition with a U.S. Bankruptcy Court in Nevada listing assets of $500,000 and liabilities of $3.4 million.
The company filed the Chapter 11 petition in November and has a court-imposed deadline to file a reorganization plan next month.
The company cut staffing from about 50 to roughly 30 and missed harvest-2010 deadlines for delivering tanks to a number of wineries that had provided deposits, including one fairly large winery in Monterey and another in Modesto that is now working with another vendor.
Sierra Stainless continues to operate, however, and will deliver about 100 tanks to eight wineries by the end of March, owner Vince Frere told Winebusiness.com.
Frere said the financial squeeze at his firm resulted from costly litigation with former business partner Daniel Neisingh along with unpaid invoices for tanks supplied to other industries. He said the Chapter 11 filing was prompted in part by an unpaid vendor, Samuelson & Co, for steel that went into an ethanol-related project.
Frere has been fabricating tanks for wineries since 1993 and was previously an owner of Modern Stainless in Cloverdale, California. Modern Stainless filed for bankruptcy about three years ago and Frere purchased its assets, starting Sierra Stainless.
“We have some very positive support from some of our larger customers in the wine business and they have stood by us during the process,” Frere said.
Frere said his company typically made 360-380 tanks each year, a number that dipped into the low 200s for the past two years, reflecting a decrease in capital spending by some wineries (see "Tank Sales Down, Bulk Storage Up," WBM, Nov '09). He said that with credit and available cash tight, time-frames in which customers release deposits are slimmer while wineries are waiting until later each season to place their orders. “You’re seeing the same issues the wineries are seeing on our side as well,” he said.