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Friday, Jan. 28, 2011

Bank seizes, shutters Walla Walla winery

WALLA WALLA -- The Walla Walla Sheriff's Office seized Whitman Cellars and closed the winery Friday.

Andrea Burkhart, attorney for Community Bank in Walla Walla, said in a news release that Whitman Cellars had defaulted on several loans and that the seizure stemmed from a lawsuit filed earlier this week by the bank.

"It is with reluctance that Community Bank took this action," Burkhart said in a phone interview. "Unfortunately, it was necessary considering the amount in default and just the need to preserve the value of the assets, which is in the interest of all parties involved."

According to a copy of the lawsuit, Community Bank alleges Whitman Cellars owed more than $2.66 million in principal and interest on three loans the winery secured from the Joseph, Ore.-based bank between 2003 and 2008.

The winery used its facilities, equipment and inventory as collateral to secure the loans.

Winery doors were closed immediately, and a sheriff's deputy was present Friday morning when the locks to the downtown winery were changed, Burkhart said.

Community Bank plans to sell the assets, which include the winemaking facility and its inventory.

Neither co-owner Sally Thomason nor winemaker Steve Lessard immediately responded to Herald requests for comment.

Last fall, the winery listed its annual case production at 5,000.

Whitman Cellars opened its downtown tasting room in 2001. When it began making wine in 1998, there were fewer than 50 wineries in the Walla Walla area. State wine officials recently reported the number of wineries in Washington has surpassed 700, with more than 140 of those in the Walla Walla Valley.

However, there has been attrition in the wake of the recession and its effects on wine buyers.

Among wineries closing in the past few months were Nicholas Cole Cellars and Yellow Hawk Cellar in Walla Walla, as well as Prosser's Olsen Estates.

And owners of Canoe Ridge Vineyards, also in Walla Walla, and sister winery Sagelands Vineyards near Yakima, closed their tasting rooms.

Meanwhile, scores of other wineries have scaled back production because of unsold inventory, which prompted some growers to leave grapes from the last crop to rot on the vine.

In October, the winery on Pine Street was listed as being for sale with an asking price of $1.1 million.

Friday's shuttering of the winery was not reflected on Whitman Cellars' website. As of Friday afternoon, it also had not updated its Facebook page since Wednesday.

Lessard continues to make wine for Corvus Cellars, which he co-owns. Corvus Cellars moved into the Port of Walla Walla's winery incubator last fall.

Lessard won many awards for Whitman Cellars after he arrived as the winemaker in 2002. Among recent awards was a double platinum in Wine Press Northwest's 2009 Platinum Competition for the Whitman Cellars 2005 Narcissa Red blend ($24), made from Walla Walla Valley grapes. Whitman Cellars also won a platinum for its 2005 cabernet sauvignon ($36), also from the Walla Walla Valley.

"Community Bank is mindful of the impact this seizure may have on Whitman Cellars employees and other participants in the local wine industry," Burkhart said.

* Eric Degerman: 509-582-1404; edegerman@tricityherald.com