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Nearest Green Distillery and Uncle Nearest whiskey founder Fawn Weaver has filed an emergency request for a federal court hearing to defend the spirits business against its lender, Kentucky-based Farm Credit. The company sued the distillery in July, claiming it defaulted on loans of over $108 million.
The whiskey brand has been in receivership since September. In a receivership, a third party (receiver) is appointed to oversee a company’s finances and assets, shepherding it through a restructuring process as it faces bankruptcy. Uncle Nearest joins several other brands in the industry battling financial struggles amid falling sales.
Now, Weaver is fighting to regain control in the business.
Debt in Dispute
Weaver and her husband Keith Weaver previously said they didn’t dispute the loan amount they owed Farm Credit. But according to the Lexington Herald Leader, they said in a new filing on November 24 that “there has not even been an adjudication as to whether the Farm Credit debt, that is the basis of the proceeding before this court, is validly owed and or is reduced in whole or in part due.”
The Weavers also reported that Farm Credit’s request to put the business under a receiver’s control “blindsided” them. They have asked the judge to prevent the receiver from “providing imminent access to proprietary commercial information by third parties” so that they can introduce counterclaims.
Weavers Look to Protect Trade Secrets, Company Valuation
The new action comes after news that the receiver is “moving toward a potential permanent disposition of the defendant’s assets,” according to the filing.
The receiver, Phillip Young Jr., enlisted investment bank Arlington Capital Advisors to look into securing new financing to replace the Farm Credit loans or marketing the company’s assets, including the Tennessee distillery, for sale.
According to the Weavers, “several competitors in the spirits industry” have contacted the investment banker to get eyes on private information like Uncle Nearest’s “trade secrets.”
But Weaver said selling the distillery now, while the whole industry is struggling, “will undoubtedly result in a price that does not accurately reflect the full market value of the company.”
The judge is giving the receiver and Farm Credit until December 2 to submit responses to the Weavers’ motion.
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Ava Levinson
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