The co-founders of Uncle Nearest and its largest shareholder have reportedly filed a motion calling on a local court to hold an emergency hearing to reconsider the receivership of the business.
A filing, shared by local news outlet Moore County Observer, shows co-founders Fawn and Keith Weaver and major stakeholder Grant Sidney lodged a request yesterday (20 January) with a US district court in Tennessee to set up a hearing.
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The Weavers filed this motion to reconsider on 23 December. The American whiskey distiller then submitted a long list of documents to the district court in a bid to return control of the company to its board.
In one of these filings, the movants said: “The receiver’s management of the business has not been able to successfully keep the Uncle Nearest brand on the upward trajectory that has been its trajectory since its founding.”
They argued Uncle Nearest’s founders and management were “in the best position to continue to build the brand for the benefit of all stakeholders in this case”.
In the filing, they also called for “a temporary stay of sale-related activities that are likely to be prejudicial to the company and its shareholders”. They “specifically” asked “the receiver and his professionals be stayed temporarily from providing access to proprietary company information to third-parties” until a hearing was held on their motion to reconsider.
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By GlobalDataIn their emergency motion yesterday, the Weavers and Sidney reiterated their demand for the court to restrict the receiver’s power over monitoring assets and reporting and to give back daily control of operations to Uncle Nearest’s executives and board.
“The motion to reconsider does not ask the court to relitigate the past but to reassess whether the receivership remains necessary in light of the current facts, facts that were unknown at the initial receivership hearing, and the material developments that have occurred since the imposition of the receivership,” yesterday’s filing said.
These “developments” have included “a precipitous decline in retail sales and enterprise value that is directly attributable to the receivership itself, the receiver’s lack of experience in running a large-scale whiskey brand, and to strategic decisions made within the receivership that were contrary to the recommendations of the company’s sales and marketing leadership”.
Just Drinks has contacted CEO and co-founder Fawn Weaver for comment on the latest emergency motion.
The Tennessee district court approved a request to appoint a receiver at Uncle Nearest in August. The demand had been made by US agri lender Farm Credit Mid-America, which had filed a complaint against the whiskey business earlier that month, alleging default on loans and misreporting barrel counts.
The receiver’s first quarterly report in October showed at that point 12 jobs had been cut, working out at 13% of Uncle Nearest’s workforce.
According to the document from receiver Philip G. Young Jr., “certain non-income producing properties” belonging to the group had also been assessed, which includes its real estate in the French region of Cognac.
The report concluded the assets in Cognac should be sold and that the receiver had already received an offer for the assets as well as “at least two additional inquiries”.
Young Jr.’s report said at the time he planned to file a motion with the court to sell the assets upon receiving “the highest and best binding offer”.
Reports of investor interest
Yesterday’s emergency motion follows reports earlier this month that an investor group requested to purchase Uncle Nearest’s assets and to resolve outstanding debt to Farm Credit Mid-America.
In a letter of intent (LOI) shared by Moore County Observer on 8 January, Walter Miles, general partner at NexGen2780, said the group had been set up “for the purpose of repaying the debt, providing working capital, and covering court and receiver fees”.
He said the proposed purchase would “deliver an equitable exit strategy for existing shareholders” and would “be subject to court supervision and receiver oversight”.
NexGen2780 said a $108m debt to Farm Credit-America would be “administered” by the group “for repayment, working capital, and restructuring purposes under court supervision”.
According to the LOI, NexGen2780 would be owned by Uncle Nearest and a group of investors upon the closing of the transaction.
“Ownership, equity allocations, and management of NexGen2780 will be defined in the definitive agreement, ensuring adequate capitalization to satisfy all obligations,” the letter added.
Just Drinks has also approached Fawn Weaver for comment on NexGen2780’s purchase proposal.
