Australian wine giant Treasury Wine Estates has dismissed speculation it could face bankruptcy, despite mounting investor concern over its debt levels and a sharp fall in its share price.

Shares in the Penfolds owner have dropped 63% over the past year as hedge funds increase short positions and question whether AU$1.9bn (£1bn) in debt is sustainable in a tougher economic environment.

The concerns were amplified this week by the Plato Global Alpha Fund, which warned that the probability of bankruptcy at Treasury is “particularly elevated” as a result of rising interest rates and weakening consumer confidence.

However, the company has pushed back strongly against the claims. A spokesperson said Treasury remains “comfortable” with its funding position and has “ample liquidity”, rejecting suggestions it may need to raise additional capital to stabilise its balance sheet.

The company told Drinks Retailing it “strongly rejects” any claims regarding bankruptcy, adding that the comments from the hedge fund should be “viewed in that context”.

The warning comes at a challenging time for the global wine sector. Last month, Plato Global Alpha Fund portfolio manager David Allen said the wine industry’s best customers are, “a dying breed”.

The fund wrote: “Treasury Wine Estates is caught in the middle of a generational, structural, and geopolitical storm… [with] a “big US problem and a big China problem”.

At the centre of investor scrutiny is Treasury’s expansion into the US, including its high-profile acquisition of California’s Daou Vineyards in 2023 for around US$900m. This was followed by further investment in Frank Family Vineyards, leading to a combined spend of more than US$1.7bn on building the business’s American footprint since 2021.

Despite this, there are signs of continued investor confidence. French billionaire investor Olivier Goudet recently took a significant stake in the business, offering a dose of optimism in TWE’s potential for recovery and its strategic direction.