Earlier this month it was reported that Uncle Nearest, one of America’s fastest growing whiskey brands, was facing the risk of entering receivership on account of over $100 million worth of defaulted loans.
Uncle Nearest refuted the allegations with co-founder Fawn Weaver being particularly vocal on social media, referring to the lawsuit and news coverage as “hit pieces.”
(For the full context of the Uncle Nearest lawsuit, check out our previous article “American Distiller Facing $100 Million Lawsuit”).
Recent days have seen a couple of significant developments in the still-ongoing saga.
Firstly, on 11th August a judge issued a gag order to all parties to ensure that the case is not “tried in the media.” The request came from Farm Credit Mid-America - the lender accusing Uncle Nearest of defaulting on their loans -, with the company singling out Weaver’s fiery social media posts.
The order prohibits either party from making statements to the press or via social media, however the judge noted that private discussions can still take place with current and potential shareholders, stakeholders and/or investors.
In addition to the gag order, the judge froze any assets belonging to Uncle Nearest that could impact Farm Credit Mid-America’s collateral while receivership was still being considered.
In the days since, the judge has now granted receivership, meaning a third party is now overseeing the property and assets of Uncle Nearest in the name of protecting Farm Credit Mid-America’s collateral.
The court documents stated: “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.”
While Fawn and her husband and fellow co-owner Keith Weaver no longer have control over much of their business, the court has suggested that it may still be possible for them to be involved in certain public elements of Uncle Nearest.
The court order noted that “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.”
There’s likely to be more to come in this story over the coming weeks and months. The issue of that $100m in defaulted loans still remains unresolved. While it’s too soon to know what will happen - and it’s perhaps unfair to speculate -, it unfortunately isn’t looking too good for Uncle Nearest right now.
