Hilltop Winery at Paka Vineyards files for Chapter 12 bankruptcy to settle debt

A five-year decline in sales in the wine industry has impacted wineries across the spectrum, from the largest companies to smaller family-run operations.

One major cause of the wine industry downturn has been a decline in total industry sales revenue by $19.7 billion, or 21%, from 2020 through 2025, dropping from a total of $94 billion in 2020 to $74.3 billion in 2025, according to Silicon Valley Bank's State of the U.S. Wine Industry Report.

Major wine companies, including the nation's largest, E. & J. Gallo, and another owner of dozens of labels, Jackson Family Wines, have permanently closed wineries this year.

Smaller family-run wineries, such as California-based Robledo Family Winery Inc., have been forced to file for bankruptcy protection, as the Sonoma, Calif., award-winning winery filed for Chapter 11 protection on April 8.

Hilltop Winery at Paka files bankruptcy

And now, distressed Texas winery and vineyard Hilltop Winery at Paka Vineyards LLC has filed for Chapter 12 bankruptcy protection to restructure its debt and reorganize its business, Chron.com reported.

The Meadow, Texas-based family winery operation filed its petition, No. 26-50117, in the U.S. Bankruptcy Court for the Northern District of Texas in Lubbock in April, listing $10 million to $50 million in assets and $1 million to $10 million in liabilities, according to Bankruptcy Observer.

Chapter 12 rules differ from Chapter 11

A Chapter 12 filing differs from a Chapter 11 filing, since it is exclusively for family farmers or fishermen. The Chapter 12 statute allows the debtor to file a repayment plan within 90 days of filing, instead of up to 120 days in Chapter 11, but Chapter 12 filing fees are significantly less, according to a webpage of law firm Weltman, Weinberg & Reis Co., LPA.

Debtors are also allowed to make seasonal payments to align with when they earn an income from farming or fishing.

Different tax liabilities

Tax liabilities are different, too. For instance, if a family farmer sells assets during a Chapter 12 case, any taxes due from the sale are deemed as unsecured and can be discharged from the case and not required to be paid, according to the Weltman, Weinberg & Reis's webpage.

The company owes about $3.1 million in debt, has over $19 million in assets, but only $6,426 cash on hand, according to court documents.

Major wine companies closed wineries

E. & J. Gallo permanently closed its Ranch Winery in St. Helena, Calif., and laid off all 56 employees by April 15, 2026, the company revealed in a Worker Adjustment and Retraining Notification (WARN) notice.

Jackson Family Wines, which makes 40 wine brands, permanently closed its Carneros Hills Winery in Sonoma, Calif., and laid off 13 workers by April 17, 2026, according to a WARN notice filed with the California Employment Development Department.

Smaller wineries file petitions

Smaller wineries having a difficult time during the winery downturn include Kerman, Calif., vineyard owner and wine producer Sran Vineyards LLC, which filed a Chapter 11 petition on Feb. 23 to avoid a public auction of its assets, according to Bondoro.

Also, 30-year-old California winery Aloria Vineyards filed for Chapter 11 bankruptcy on Feb. 24 to reorganize its business and continue operating as a going concern but did not list a specific reason for filing its petition.

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This story was originally published May 3, 2026 at 11:03 AM.