KASOTA — Chankaska Creek Ranch, Winery and Distillery is under a court-supervised sale process with a $2.5 million purchase agreement in place, while competing buyers have until Oct. 1 to submit higher offers.
The proposed sale involves all of the Kasota winery and hospitality business, including its vineyard, production and bottling facilities, tasting room, restaurant and event spaces, equipment, inventory and real estate.
The $2.5 million agreement with Kasota Acquisitions LLC is what’s called a stalking horse bid, establishing the current highest offer while allowing other qualified buyers to submit competing proposals. Competing bids must exceed the existing offer by at least $100,000.
Lighthouse Management Group Inc. is serving as the court-appointed assignee and is overseeing the assets and sale process. A sale approval hearing is scheduled for Oct. 8 in Le Sueur County District Court.
According to a report filed with the court Aug. 5, the companies’ known creditor claims total approximately over $15 million, subject to reconciliation.
The court report states that, based on anticipated sale proceeds, the assignee does not expect enough money to fully satisfy claims and does not expect a distribution to unsecured creditors.
The companies’ books and records reflected approximately $3.2 million in unsecured obligations, meaning not backed by collateral, at the time of the assignment. That amount included trade payables, past-due accounts, customer deposits and approximately $2.9 million in unsecured bridge loans from investors.
“This sale represents an opportunity to acquire one of southern Minnesota’s best-known winery and hospitality destinations through a transparent and competitive court- supervised process,” Josh Clark, who is overseeing the process on behalf of Lighthouse, stated in an Aug. 10 press release announcing the sale.
The search for a seller started in February with an announcement from owners Jane and Kent Schwickert. At the time they said a combination of challenges, including the prolonged effects of the pandemic recovery and sustained high interest rates, placed the business under financial strain and made it impossible to continue operating the way they had since founding the establishment in 2008.
“Our goal at Chankaska has always been to create great products, be a regional destination, make our community proud and provide a venue that our patrons and friends can enjoy,” they said in a joint statement on Feb. 6. “We hope this difficult decision will assure that what we started can continue.”
Court documents state the brokers contacted hundreds of potential buyers directly and distributed information to thousands of additional prospects through business and real estate marketing platforms. The marketing process produced three offers and the $2.5 million Kasota Acquisitions offer was identified as the highest and best offer received to date.
Chankaska has continued limited wine and spirits sales, operates scheduled events and new events are also reportedly being booked. Under the proposed purchase agreement, Kasota Acquisitions would assume outstanding event contracts and continue the event business.
The court documents state that the assignee continues to solicit competing offers.
The final terms of the proposed transaction are expected to be disclosed following court approval of the sale and the Oct. 8 hearing will give the court an opportunity to consider the proposed transaction and any competing offers received before the Oct. 1 deadline.