RICHMOND, VA. (AP) - Former Virginia socialite and winemaker Patricia Kluge and her husband have filed for personal bankruptcy protection after failing to reach a settlement with several banks.
In a filing in U.S. Bankruptcy Court in Lynchburg, Kluge and William Moses say their debts are primarily business obligations. They say in the filing that they estimate their assets between $1 million and $10 million, compared with $10 million to $50 million in liabilities. The couple estimates they have between 50 and 99 creditors.
The Chapter 7 bankruptcy petition comes after the failure of negotiations with three principal banks, the couple’s attorney Kermit Rosenberg said Tuesday. The banks had foreclosed on the couple’s winery business, their 23,500-square-foot Albemarle House mansion and a neighborhood of luxury homes under development.
Rosenberg said the sides were trying to “structure an overall settlement, but that didn’t work.”
He added that the filing places the couple’s assets under the control of a court-appointed trustee, William Schneider, who will administer payments to their creditors.
“They’re getting on with their lives, trying to discharge their debts and start over,” Rosenberg said.
Kluge and Moses are scheduled to meet with creditors on July 15, Rosenberg said. Statements listing assets, liabilities and other financial details are due to the court on June 29, but Rosenberg says he plans to seek a deadline extension.
Bank of America filed a lawsuit against Kluge in U.S. District Court in Charlottesville, alleging that Kluge defaulted on three loans worth nearly $23 million on the brick Georgian home and its grounds. The bank purchased the property for $15.26 million.
The couple also lost their Kluge Estate Winery & Vineyard after defaulting on nearly $35 million in loans from Farm Credit Bank during their effort to build a national wine business during the economic downturn. Reality-television mogul Donald Trump purchased most of the business in April and said he wants to operate the vineyard.
Lender Sonabank took back the couple’s upscale Vineyard Estates subdivision for $4.9 million at a January auction after Kluge and Moses defaulted on an $8.2 million loan after few properties on the 511-acre tract had sold. The couple’s current home in the subdivision wasn’t part of the sale.
Kluge acquired Albemarle House and its 3,000 acres in her 1990 divorce from billionaire media mogul John W. Kluge, who died in September. It was designed with the help of architect David Easton in the style of an 18th-century English country manor, with multilevel English gardens and fountains, a swimming pool and a rustic guest cabin.
In the 1980s, Kluge hosted extravagant events for royalty, corporate leaders, celebrities, politicians and literary figures at the home, which Kluge once had said defined her and taken on a persona of its own. The 62-year-old Kluge had said last year that she no longer lived that life and instead was trying to focus on the winery business.
To raise cash for the struggling winery, Kluge enlisted Sotheby’s last June to conduct an onsite auction of furnishings, antiques and other items, which brought in $15.2 million. An ornate Qing Dynasty Chinese table clock sold for nearly $3.8 million, and bidders worldwide also paid top prices for paintings, furniture and other pieces in the collection. She also liquidated much of her jewelry for about $5 million at an earlier sale.
Zinie Chen Sampson can be reached at https://www.twitter.com/zinie