Perry, that’s what happened in the Carolina Wine Co case, which was cited by the trustee. Therefore I think that in-stock, paid-for, boxed and ready-to-ship wine with your name on it, even if they billed you for shipping but didn’t send it out the door, is at high risk of being considered part of the debtor’s estate.
There were suggestions upthread to hire an attorney to help deal with that sort of situation. I’ve no idea if that might be helpful or just a waste of money.
Here is a link to the decision in the Carolina Wine Company case that addressed ownership of inventory that had been purchased for customers but not yet shipped or picked up:
As noted by Joe Floren above, it’s a decision in a different state and was based, in part, in specifics of the CWC business model. Sill, it may be interesting to read the decision. Some of the specifics practices were that customers could change their orders after the wine had arrived at CWC and have their cost refunded, CWC bore the risk of loss if the wrong wine was delivered (they refunded purchase price plus 10%), the wine was stored in bulk and not segregated for individual customers (except in one case and that person still lost the wine), and CWC did not charge sales tax until the wine shipped or was picked up.
-Al
Sales tax issue, I am afraid, may be the crusher.
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Premier Cru did charge sales tax at time of sale.
-Al
For us, as CA residents, but I assume not to out of state buyers. Could that mean the CA claimants with wine in storage might have a different outcome than out of state?
For what it’s worth, both Arrowood and WineBid charge me sales tax and I live way over on the right coast in NJ.
2/9 PC BANKRUPTCY UPDATE - COURT APPROVES EMPLOYMENT OF BRIAN NISHI
My summary of the 2/8 PC hearing is below. As a disclaimer, I am not an attorney and I disclaim any responsibility or liability for errors, omissions, and the accuracy of any information. The items in parentheses are my clarifications.
The hearing was initially interrupted by someone attempting to serve John Fox. Also, Bostick and the judge spoke off-microphone towards the end of the hearing.
re: The Hiring of Brian Nishi
Bostick: > "We’ve talked with some of the largest creditors including American Express. They may become the largest creditor due to the number of chargebacks. They are full supportive of the Trustee’s application (to hire Nishi).
Judge: > “You’re not going to have that many people who have both the information and the ability to talk to you. That’s going to change over time.”
(Again, The Judge seemed concerned about possible criminal charges and Fox/Ortege pleading the 5th.)
McGee: “He (Nishi) does have the wine. He was the one who told us about the transaction (the $25,000 of wine that PC gave him). He allowed (PC) to use his credit card was because they were maxed out. He was just an employee with no skin in the game, just a viable credit card.”
(Ms. McGee was apprehensive at the idea of hiring Nishi. Her concerns centered around the $25,000 payment and that he is not a disinterested party.)
Judge: “I suggest that we treat this case not like a traditional Chapter 7, but something more like a Chapter 11, there was a business aspect of this that is beyond a typical Chapter 7 Scenario. I am going to be flexible on this. > I am going to authorize Nishi’s employment, for lack of a better term. I am going to find that he is not a professional, his role will be almost exclusively informational. > He is going to answer question the trustee poses and get to the bottom of who owns what and how to dispose of it. That is not something that rises to level of Nishi managing a discrete portion of the case. He is not exercising discretion or judgment. He is answering questions from the trustee.”
PC’s Wine Inventory
PC only has ~$200,000 in wine, against which there are no sales orders. There was discussion about holding an expeditious preliminary auction for these wines.
Receipt of Funds
Bostick: "We have been talking to people and we did receive funds from a concerned potential defendant. (a preference claim the state could bring for fraudulent transfer) I don’t want to to go into great detail about it here. We have the unfettered use of $35,000 pending the court’s approval.
Notice to Creditors via Email
The court discussed the possibility of communicating with creditors via email/website instead of USPS. Due to the large number of creditors (~9200), the estate spends $5000 per instance to provide notice to all parties.
The court discussed the possibility of communicating with creditors via email/website instead of USPS. Due to the large number of creditors (~9200), the estate spends $5000 per instance to provide notice to all parties.
I’ve wondered about the cost of the mailings. I’ve received five of them so far. Besides the cost, there is a question of timeliness. The notice I received yesterday (2/8) informed me that there was going to be hearing on 2/1.
As far as learning about Nishi receiving wine as compensation for $25k in debt during the preceding 90 days, PC was supposed to disclose such transfers to creditors on Form 207 “List payments or transfers–including expense reimbursements–to any creditor, other than regular employee compensation, within 90 days before filing this case unless the aggregate value of all property transferred to that creditor is less than $6,225”. At the time of the original filing, this was listed as “to be provided”.
-Al
Before the judge might segregate the labeled wines for the named buyers, he would
need to justify how such labels are enforceable transference of physical possession or
legal ownership. Personally, I would be skeptical that the judge would deem labels as
valid designation of essentially super-senior secured creditors.
Indeed, what would the judge do, if several customers were expecting delivery of one
given wine bottle, and the box containing it has multiple names or even some
crossed-out names? Which label then has seniority?
I would love to put my label on this Mercedes-Benz outside my apartment building.
It is a bit different when wine is packed in a container for shipping with a UPS label on it however.
I would be a little surprised if PC was not charging sales tax in recent years, since most states now require it to be collected, but maybe they weren’t (I know retailers who are required to but don’t). As you know, I’m not a lawyer, but I doubt it matters. The sales tax question didn’t appear to influence the CWC ruling. Logic might suggest that if PC had not collected it from California purchasers of pre-arrival wines, it would be difficult for those customers to claim the purchase had been completed and title transferred. OTOH, I doubt the payment of sales tax, by itself, is nearly sufficient to indicate transfer of title. As far as the out of state customers, if PC was conducting business as if they weren’t required to collect sales tax, then perhaps the difference is not significant.
-Al
My logic might be applicable if the label indicates a shipper, rather than a buyer.
most likely not as it relates to title transfer.
Here is how I look at it.
The legal transaction of any purchase of merchandize should be finalized only when the customer signed for and took possession of the purchased merchandize.
In other words any wines belong to PC whether they are in their warhorse, the shop and/or waiting for transfer to their shippers in packed boxes…etc…etc…PC still had their legal responsibility ( or liability ) for them.
Just my 2 cents.
I certainly see that logic, but I am sure a counterargument can be made to asset that title had passed, even if PC were still responsible (perhaps PC’s role shifted from purveyor after passing of title to storage). I read the Carolina case and there are many similarities, but also many differences. PC customers did not have the right to cancel or change their orders, once placed. PC did not agree to substitute wine with 110% of value if they got wrong wine (and history shows they did not even come close). Will ultimately be for lawyers to contest and a judge to decide, I suppose.
This makes sense to me. I buy stuff online all the time. Once the charge is made, I feel the merchandise is owned by me, but is being stored (until shipment) by the merchant. The merchant has reduced their inventory assets but increased their cash assets to compensate.
And this is quite different from what Carolina Wine did. Carolina Wine’s orders were cancellable, so none of their sales were complete.
The other twist is that they weren’t paying it into the state!
Here are things in small details…
…but I am sure a counterargument can be made to asset that title had passed, even if PC were still responsible…*
Doubtful this argument will be valid when one is dealing with dispute for charge back with credit company for purchasing merchandize ( such as wines ).
Title of ownership of the merchandize (= wines ) could only be legally finalize after the customer took over the possession with his satisfaction.
*****…perhaps PC’s role shifted from purveyor after passing of title to storage *****
If PC is still the legal holder of the title of his wines regardless ( including the period of the time for delivery to the customer ) …until the transaction …to his customers…has been legally finalized.
******…I read the Carolina case and there are many similarities, but also many differences. *****
Sorry…I did not read the Carolina case; so no comments. Please also note I have no issue in PC Saga as I live in Canada.
*…PC customers did not have the right to cancel or change their orders, once placed. PC did not agree to substitute wine with 110% of value if they got wrong wine (and history shows they did not even come close). …
Understand this point well…because there is a signed agreement. This agreement could only be changed with consent ( verbal or written ) from both parties
*Will ultimately be for lawyers to contest and a judge to decide, I suppose.
Yes - very truly. No argument from me…and that is why we have legal systems.