A MAJOR Hunter wine operation that produced four million bottles a year, exported to 30 countries, and was Australia's biggest seller of wine to Russia, was placed in liquidation this week.
Hunter Wine Services (HWS), which used to operate from the disused Oak dairy factory in Muswellbrook, has been caught up in the collapse of its controversial parent company Fernbrew, that was part of the D'Aquino Group, a national liquor operation.
According to liquidator Rahul Goyal, of KordaMentha, Fernbrew was also placed in liquidation this week owing more than $87 million to the Australian Taxation Office.
Fernbrew, which turned over $74.59 million last financial year and made a net profit of $6.95 million, specialised in wholesale liquor distribution and manufactured and bottled wine at the old Muswellbrook dairy.
It is understood HWS also supplied about three million litres of raw ethanol to Fernbrew each year.
Ethanol is the alcohol normally found in beer, wine and spirits.
HWS former director and shareholder John Hordern described the collapse of the business as "very unfortunate".
Mr Hordern, who was chief winemaker at HWS, said the company stopped bottling in September and "closed" in February.
He said he was unable to comment further on the collapse as "I haven't been involved since the start of the year".
"We were doing a lot of exports and we had a great team, it's a real shame what has happened," he said.
Mr Hordern studied wine production and marketing at South Australia's Roseworthy College in the 1970s and was classmates with Rex D'Aquino, the grandson of the founder of the Orange-based D'Aquino Group.
Rex D'Aquino and Mr Hordern started HWS in 2001.
The conversion of the Muswellbrook Oak factory to wine production began in 1995 when the landmark art deco-style building was leased by a winemaker who later moved to Mudgee.
According to Australian Securities and Investments Commission (ASIC) documents, Fernbrew and Mr Hordern's family company, Anthony Hordern & Sons, owned a half-share in HWS until February 5 this year.
Five days after Fernbrew was placed in voluntary administration, it bought out the Hordern's share of HWS for $500,000.
Mr D'Aquino was the sole director and shareholder of HWS when it collapsed and the sole director of Fernbrew.
Mr D'Aquino's elderly mother Zina, and another man, Peter Tuson, are the owners of Fernbrew through a holding company.
The D'Aquino Group's assets include Highland Heritage Estate wines, liquor stores in Orange, Bathurst, Parkes and Wellington and a helicopter charter service.
Mr Hordern and his winemaking team made the D'Aquino's Highland Heritage wines since 1993, and in 2016 the company's Orange Fume Blanc won the 2017 NSW Wine Awards trophy for best young sauvignon blanc.
Fernbrew has had a chequered history. In 2007 the liquor company pleaded guilty to producing fake Scotch and was forced to shell out more than $100,000 in fines and court costs.
To call whisky Scotch Whisky you must comply with Scottish law which says any whisky called Scotch must contain a minimum of 40 per cent alcohol and be produced in Scotland.
NSW food authorities seized almost 300 bottles of Old McTavish Scotch Whisky from Fernbrew's Orange premises after finding it was not from Scotland and had an alcohol content of 38.6 per cent.
In June last year an ABC investigation alleged that Fernbrew was selling fake spirits and was again under investigation by authorities. No disciplinary action has been taken following this investigation.
It was the latest in a string of allegations against D'Aquino-related companies. D'Aquino Bros is fighting a lawsuit brought by the Scotch Whisky Association in the Federal Court involving alleged trademark infringement.
Mr D'Aquino is the third generation owner of the family company established in 1946 and did not respond to requests for comment on Wednesday.
In 2009, HWS was fined for giving buyers less drop for their dollar than claimed on the package. HWS was ordered to pay $3154 in Newcastle Local Court for selling casks containing one litre less of wine on average than what was marked.