California’s oldest family-owned winery files for bankruptcy after more than 160 years. Why exactly this winery went out of business?

After enduring Prohibition, wildfires, economic hardships, and the COVID-19 pandemic, a California winery is now confronted with yet another significant obstacle. Founded in Sonoma in 1858, Gundlach Bundschu Winery has declared bankruptcy under Chapter 11. Despite having more than $37 million in debt, the winery claims it will keep running as it develops a strategy for financial reorganisation and searches for potential new investors. Scroll down to

Why did Gundlach Bundschu file for bankruptcy?

An expansion prior to COVID-19 pandemic was a significant contributing factor to the winery's financial issues. For its Abbot's Passage brand, Gundlach Bundschu purchased a 60-acre Glen Ellen site in February 2020. The business anticipated that the investment would aid in its expansion. However, the pandemic struck shortly after the acquisition.

Businesses closed, and people stayed at home, which harmed tourism and tasting rooms. The winery's debt kept rising but the expansion it had anticipated did not materialise. The winery has also had to deal with declining wine demand, shifting drinking patterns, surplus inventory, and shifts in the distribution industry, according to court documents published by the San Francisco Chronicle. According to KTVU, throughout the previous three years, the winery reduced its expenditures by nearly 40%, or about $6 million. But those reductions were insufficient to address its debt issues.

A winery with more than 160 years of history

Gundlach Bundschu is not your typical winery. It was founded in 1858 and has been owned by the same family for six generations. Prohibition, the 1906 San Francisco earthquake, and significant wildfires are just a few of the challenging times the winery has endured throughout the years. During the 2017 Nuns Fire, which devastated most of Sonoma County, the family also lost their historic home. Later on, the land was renovated and included in the winery's financial agreements.

Additionally, the winery has grown in popularity as a tourist destination. It used to host more than 75,000 guests annually for events like music concerts, weddings, and wine tastings. The San Francisco Chronicle reports that the winery produced roughly 42,000 bottles of wine and received about 30,000 visitors in 2025.

California's wine industry is facing problems

The bankruptcy occurs during a challenging period for the wine industry in the United States. US wine sales decreased in 2025, with a total volume of about 329 million cases, down from 335.9 million the year before, according to Silicon Valley Bank's 2026 State of the US Wine Industry Report. The condition was referred to as a "multi-year demand correction" in the report. As wine consumption declines, stockpiles rise, and winery property prices decline, other Californian wineries are also under pressure. The shifting market has produced a particularly challenging scenario for older wineries with huge properties and hefty running expenditures.

What happens to Gundlach Bundschu now?

Filing for Chapter 11 does not mean the winery is shutting down. The process allows Gundlach Bundschu to continue running its business while it works with creditors and tries to restructure its finances. Its tasting room is expected to remain open, and the company is looking for a potential investor. The restructuring could, however, change who controls the historic winery. “This is about creating a fair, court-supervised process that allows this historic business to survive,” sixth-generation owner Jeff Bundschu said. After more than 160 years, Gundlach Bundschu is entering an uncertain period. But the winery is still operating, and the family is hoping its latest financial challenge will not bring an end to one of California's oldest wine stories.