15. COMMITMENTS AND CONTINGENCIES

Legal Matters

Gaucho Group Holdings Inc. (Bankr. S.D. Fla.)

On November 12, 2024, the Company filed a voluntary petition, Case No. 24-21852 (the “Chapter 11 Reorganization”) in the United States Bankruptcy Court for the Southern District of Florida (the “Bankruptcy Court”) seeking relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”).

The Company continues to operate its business as a “debtor in possession” subject to the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code, orders of the Bankruptcy Court, and applicable non-bankruptcy law. The Company has sought approval of various motions with the Bankruptcy Court that are intended to enable the Company to continue its ordinary course operations and facilitate an orderly transition of its operations into Chapter 11.

Gaucho Group Holdings Inc. v. 3i, LP et al. (D. Del.)

On February 16, 2024, the Company commenced an action in the United States District Court for the District of Delaware (the “Delaware Action”) through the filing of a complaint against 3i, LP, 3i Management LLC and Maier Joshua Tarlow (“3i Parties”) in the 2023 Note committed underlying violations of the Securities Exchange Act of 1934 and, therefore, the securities contracts entered into by the parties are void.

On April 5, 2024, the 3i Parties filed its answer to the Company’s complaint, including affirmative defenses and asserted four counterclaims against the Company; specifically, (i) breach of contract, in connection with the 2023 Note, (ii) request for preliminary injunction and permanent injunction, (iii) unjust enrichment and (iv) restitution.

On April 26, 2024, the Company responded to the 3i Parties’ counterclaims by filing a partial motion to dismiss, which seeks dismissal of the 3i Parties’ counterclaims for (i) preliminary and permanent injunction, (ii) unjust enrichment and (iii) restitution. On May 17, 2024, the Company’s motion to dismiss was fully briefed and submitted to the court. As of the date of this filing, the court has not yet rendered a decision on the Company’s motion.

On August 13, 2024, the Company moved for a temporary restraining order and preliminary injunction against the 3i Parties. The Company’s motion specifically requests that the court enjoins the 3i Parties’ attempt to conduct a public disposition of certain assets of the Company.

On October 11, 2024, the U.S. District Court for the District of Delaware held a hearing on the Company’s motion for a preliminary injunction against the 3i Parties.

On November 5, 2024, the District Court denied the Company’s motion for a preliminary injunction against the 3i Parties.

On November 7, 2024, the Company appealed the District Court’s decision to the United States Court of Appeals for the Third Circuit.

On November 13, 2024, the District Court issued an Order (i) staying all further proceedings on the counterclaims alleged by the 3i Parties against the Company, and (ii) directing the Company to advise the Court within thirty (30) days thereof if it will be seeking leave of the Bankruptcy Court to proceed with its claims against the 3i Parties.

On December 12, 2024, the District Court issued an Order directing the Company to advise the Court on or before January 31, 2025, if it will be seeking leave of the Bankruptcy Court to proceed with its claims against the 3i Parties.

On January 22, 2025, the 3i Parties moved for a Judgment on the Pleadings against the Company.

On January 27, 2025, the Company withdrew its appeal of the District Court’s decision to the United States Court of Appeals for the Third Circuit.

On February 4, 2025, the Court issued an Order setting a Status Conference for March 7, 2025.

Subject to the Chapter 11 Reorganization, the Company remains committed to litigating its claims for relief against the 3i Parties and defending itself against the 3i Parties’ counterclaims.

3i, LP et al v. Gaucho Group Holdings, Inc. et al. (E.D.N.Y.)

On October 3, 2024, the 3i Parties commenced a proceeding in the U.S. District Court for the Eastern District of New York (“Quash Proceeding”). In the Quash Proceeding, the 3i Parties seek to quash the subpoenas issued in connection with the aforementioned litigation between the Company and the 3i Parties in the U.S. District Court for the District of Delaware, and were served against certain financial institutions used by the 3i Parties.

On November 12, 2024, the Company informed the New York Court that it voluntarily commenced Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court for the Northern District of Florida.

On November 15, 2024, the District Court stayed the Quash Proceeding pending resolution of the Chapter 11 Reorganization.

Subject to the Chapter 11 Reorganization, the Company maintains that it is entitled to the information sought by the subpoenas.

3i, LP v. Gaucho Group Holdings, Inc. et al. (Sup. Ct., NY County)

On June 7, 2024, 3i, LP (“3i”) commenced an action in the Supreme Court of the State of New York, County of New York through the filing of a complaint against the Company and its subsidiary Gaucho Group, Inc. (the “Gaucho Parties”). 3i’s complaint alleges that the Gaucho Parties are in breach of a Senior Secured Convertible Note, dated February 21, 2023, and, therefore, 3i is permitted to exercise certain rights granted to it by a certain Security and Pledge Agreement, dated February 21, 2023.

On June 14, 2024, the Company moved to dismiss or, in the alternative, stay this action. On July 7, 2024, the Company’s motion was fully briefed and submitted to the court. As of the date hereof, the New York Court has not issued an order staying this action.

Subject to the Chapter 11 Reorganization, the Company remains committed to defending itself against 3i, LP’s claims.

Disputed 3i Claim

On November 18, 2024, 3i, LP (“3i”) filed a reservation of rights statement with the United States Bankruptcy Court, claiming that the balance due in connection with the 2023 Senior Secured Convertible Note was $7,417,599. On January 21, 2025, 3i filed a Proof of Claim with the Bankruptcy Court, alleging that the balance of the 2023 Note was approximately $8.0 million. As of September 30, 2024, the Company has recorded liabilities in the aggregate amount of approximately $4.4 million in connection with the 2023 Note, representing the aggregate amount of principal, accrued interest, cash true up obligations and redemption premiums. The $8.0 million balance alleged by 3i includes additional legal fees, late charges and conversion failure charges. The validity and application of these additional charges are disputed by the Company.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

3i, LP v. Gaucho Group Holdings, Inc. (Sup. Ct., NY County)

On June 19, 2024, 3i commenced an action in the Supreme Court of the State of New York, County of New York through the filing of a motion for summary judgment in lieu of a complaint against the Company (the “3i Motion for Summary Judgment”). 3i’s motion alleges that the Company is in breach of a Senior Secured Convertible Note, dated February 21, 2023.

On June 28, 2024, the Company moved to dismiss or, in the alternative, stay the 3i Motion for Summary Judgment.

On June 29, 2024, the Company submitted a letter application to the court requesting the 3i Motion for Summary Judgment be stayed indefinitely pending a final resolution of the Delaware Action.

On July 7, 2024, the New York Court entered an order indefinitely staying this action pending final resolution of the District of Delaware action.

On November 12, 2024, the Company informed the New York Court that it voluntarily commenced Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court for the Northern District of Florida.

As of the date hereof, the New York Court has not issued an order in response to the Company’s November 12, 2024 Notice of Bankruptcy filing.

Subject to the Chapter 11 Reorganization, the Company remains committed to litigating its claims for relief against 3i and defending itself against 3i’s claims.

General Litigation Disclosure

From time to time, the Company and its subsidiaries and affiliates are subject to litigation and arbitration claims incidental to its business. Such claims may not be covered by its insurance coverage, and even if they are, if claims against the Company and its subsidiaries are successful, they may exceed the limits of applicable insurance coverage. The Company is not involved in any litigation that is likely, individually or in the aggregate, to have a material adverse effect on our condensed consolidated financial condition, results of operations or cash flows, except as disclosed.

Port Washington Imports, LLC v. Gaucho Group Holdings, Inc. (Sup. Ct., Nassau County)

On November 26, 2024, Port Washington Imports, LLC (“Port Washington”) filed suit against the Company alleging breach of contract and seeking damages in connection with an import and distribution agreement. The Company sent Port Washington a cease and desist letter advising that as a result of the Chapter 11 Reorganization, all litigation is subject to an automatic stay.