Fawn Weaver loses control of Uncle Nearest
A federal judge has ordered a receivership for Tennessee’s Nearest Green Distillery after the business defaulted on more than US$100 million in loans.
Farm Credit Mid-America, Uncle Nearest’s primary creditor, filed a lawsuit at the beginning of the month. It asked federal judge Charles E Atchley to put Nearest Green under receiver control to ensure collateral does not go missing.
The lender accused the whiskey company of providing inflated barrel inventory reports, breaching financial covenants, and misusing loan funds. Uncle Nearest’s main defence is that many of these actions were taken fraudulently by its former chief financial officer (CFO), who is separately under investigation.
The judge has now granted the receivership.
The court documents read: “Farm Credit asserts that the receivership factors weigh in its favour. Defendants, unsurprisingly, dispute this contention.
“They argue that appointing a receiver would be inappropriate given the brand damage it would entail, the availability of less drastic remedies, and the fact that many of the issues underlying the parties’ dispute were caused by the unauthorised actions of Uncle Nearest’s former CFO, Mike Senzaki.
“The court appreciates defendants’ position, but it finds that appointing a receiver is necessary under the circumstances.”
The court concluded that there is not “adequate security” for Farm Credit’s loan, proven by the “lack of certainty surrounding Uncle Nearest’s solvency”. It added that the “issues surrounding Uncle Nearest’s barrel inventory” further support this conclusion.
The court had also previously imposed a gag order to ensure the case is not ‘tried in the media’. However, following the ruling, Fawn Weaver posted a clip from Black Panther on Instagram with the caption: “The race is not given to the swift. Easy is never the expectation or goal.”
The post was accompanied by the hashtags #ThePeoplesCEO and #UncleNearestCEO.
It is unclear how co-founders Fawn and Keith Weaver will proceed following the receivership; however, the court has suggested they can continue to be publicly involved in the business.
It said: “The court can craft a receivership order that still allows the Weavers to market Uncle Nearest and further build the brand. By keeping the Weavers involved in this way, they could mitigate any potential brand damage that a receivership might entail.”
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