6:30 p.m.Saying Copia’s decision to seek Chapter 11 bankruptcy is a sham, Copia’s main creditor is asking a bankruptcy judge to block the troubled non-profit from going forward with its plan to reorganize.

ACA Financial Guaranty Corporation, insurer of Copia’s $78 million bond debt, said in court documents filed this week that Copia’s Chapter 11 filing is designed to get the nonprofit out from under crushing debt at creditors’ expense, while Copia transforms itself into a for-profit enterprise.

“This case is nothing more than an effort by the debtor’s management to attempt to profit by diverting assets from this failed nonprofit wine museum to a new ‘for profit’ enterprise to be run for the benefit of insiders,” according to court documents.

Copia leaders tell a different story, charging that ACA has blocked Copia’s efforts to sell its 12-acre Napa property and begin a turnaround. Copia Interim CEO Garry McGuire said in an e-mail to the Register that the insurer hopes to avoid paying out $40 million or more it may be liable for if Copia sells at its current market value.

Copia officials estimate the nonprofit’s current land value tops out at $30 million.

In a separate court filing, McGuire said Copia has been hemorrhaging in excess of $5 million each year, relying exclusively on donations from board members and winery partners to pay its debts.

“With our real estate property values falling and credit tightening, Copia has been unable to service the interest payments in the recent period,” McGuire said in court documents. “Further, we believe that the organization is no longer able to raise money from trustees and philanthropists to service bond debt.”

McGuire also said changes to Copia’s programming — including creation of more Web-based food and wine programming and shedding relationships with outside event sponsors —brought in $823,000 in additional revenue in the last six months, and that one suitor — Los Angeles-based Pacific Star Capital — stood ready to pay $28 million in cash for the center last month.

In a fix

Copia was launched seven years ago as a Napa center for wine, food and the arts. It struggled financially from the start, and in the last couple of years has searched for a winning formula by eliminating its entry fee, putting a greater emphasis on food and wine and less on the arts.

The center has been home to concerts, cooking classes, movies, wine tastings and more.

But growing debt forced leaders to take desperate steps to shore up finances. In mid-November, the center closed without warning, leaving some restaurant and event customers out in the cold.

On Dec. 1, it sought Chapter 11 bankruptcy protection, listing between $50 million and $100 million in debt and less than $50 million in assets.

In a statement summarizing Copia management’s negotiations with ACA in the past four months, McGuire said the terms of Copia’s bonds prevented the center from borrowing any type of money, including lines of credit from banks. This made negotiations to restructure Copia’s operations with ACA representatives paramount as Copia began to run out of money.

At first, McGuire wrote, the two parties agreed to enter into a process to sell Copia’s campus as soon as possible — with Copia turning over its list of interested parties to ACA’s real estate company.

Sale of the land was a crucial part of Copia management’s plan to divide the nonprofit into two arms: One that would continue the wine, food and garden educational programs that have marked its seven years in Napa, and one that would focus on licensing the Copia name to a “sister” corporation.

According to both sides, a settlement agreement was being struck in the final weeks before Copia filed for bankruptcy.

However, that’s all the two sides agree on.

In court papers, ACA charges that it told Copia the agreement was set to be circulated by Dec. 2.

Copia officials said they were given assurances form ACA that the agreement would be struck before Copia ran out of cash — but then never heard from ACA. They then turned to Chapter 11 bankruptcy.

In its court filing, ACA said it has secured “multiple potential purchasers” for the Copia campus. But ACA maintains Copia’s bankruptcy proceeding is interfering with the sale, going so far as to accuse Copia management of running a “shadow process” while supposedly negotiating in good faith with ACA.

“The debtor actively participated in and was outwardly supportive of the sale process,” ACA court filings read. “Based on the debtor’s first day pleadings, however, it is now apparent that during the same period of time that the debtor’s management was purporting to assist ACA in connection with the sale process, they were at the same time running a shadow process designed to undercut ACA’s effort to maximize the value of the property.”

McGuire wrote ACA protested continuing operations at Copia and is not motivated to sell the property quickly.

A hearing on the case is scheduled for Dec. 19 at U.S. Bankruptcy Court in Santa Rosa.