Weavers file motion as Uncle Nearest faces potential sale
The founders of Tennessee whiskey maker Uncle Nearest have filed an emergency relief order to prevent the receiver from sharing “competitively sensitive” information with interested buyers.
In August, a federal judge ordered a receivership for Nearest Green Distillery after the business defaulted on more than US$100 million in loans. It followed a lawsuit filed by Farm Credit Mid-America, Uncle Nearest’s primary creditor.
Founders and wife and husband Fawn and Keith Weaver were forced to take a step back from managing the business after Phillip Young was appointed as receiver for Uncle Nearest.
In a motion filed on 24 November in the US District Court for the Eastern District of Tennessee, the Weavers asked the court to lift part of the litigation stay imposed when the company was placed into receivership. The stay has prevented the founders and affiliated entities from answering Farm Credit’s complaint, asserting defences or filing counterclaims.
The Weavers said the receivership has advanced “with respect to a mere claim” that has not yet been adjudicated and warned that the current process risks “irreversible” damage to the business, its competitive position and its shareholders. They expressed particular concern over the receiver’s engagement of an investment bank and interest from several rival spirits producers seeking access to commercial information about “pricing, distributor relationships, production planning, supply chain, and other trade secrets”.
The receiver is exploring two options: refinance Farm Credit’s loans or find a buyer for the Uncle Nearest business.
Last month, the receiver was investigating the possibility of selling Uncle Nearest’s non-income-producing assets, including its vineyard in Cognac.
The Weavers argue that selling the Uncle Nearest business while in receivership and at a time when the spirits sector is “in a lull will undoubtedly result in a price that does not accurately reflect the full market value of the company”. The couple also noted any “valid claims of Farm Credit will get paid in full in any event”.
Young, in a response dated 26 November, urged the court to deny the request. He said renewed litigation would be “extremely disruptive and damaging” at a point when the business must focus on stabilising operations in a weaker market.
Young added that the company remains reliant on Farm Credit for immediate financial support and argued it would be imprudent for the receivership estate to enter a contentious court battle with the lender while evaluating the group’s assets, liabilities and strategic options.
The receiver also disputed the founders’ claim that competitors have accessed a data room, stating no such room yet exists and that all parties receiving preliminary information have been required to sign non-disclosure agreements. He asked the court to compel the founders to disclose any evidence of confidentiality breaches.
A separate filing shows the receiver is still gathering financial records from a number of related entities, with further bank statements requested from several subsidiaries and affiliates.
The court is expected to consider the emergency motion in early December.
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