A judge has ordered that Uncle Nearest remains under court-appointed receivership, quashing attempts by the company’s co-founders to regain control of the business.
The news marks another step forward in an ongoing legal dispute between the group and its lender Farm Credit Mid-America, which last year filed a complaint in Tennessee alleging default on loans and the misreporting of barrel counts.
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A court in the US state accepted a request from the US agri-firm to appoint a receiver for the whiskey business in August.
In January, Fawn and Kevin Weaver, the co-founders of Uncle Nearest, reportedly filed a motion calling for an emergency hearing to reconsider the receivership of the business.
In March, Uncle Nearest also moved for bankruptcy protection and sued US agri-lender Farm Credit Mid-America. That was dismissed following an expedited hearing.
In an order filed on Tuesday (26 May), shared by the Moore County Observer, district judge Charles E. Atchley Jr. denied a motion from Fawn and Kevin Weaver and holding company Grant Sidney that had looked to end receivership over Uncle Nearest, Inc., Nearest Green Distillery, Inc., and Uncle Nearest Real Estate Holdings, LLC.
Within the 62-page order filed with the US District Court Eastern District of Tennessee at Winchester, judge Atchley also called for the receivership to be expanded to include Grant Sidney, the holding company through which Fawn Weaver owns her Uncle Nearest shares.
Just Drinks has contacted Grant Sidney, Fawn Weaver and Uncle Nearest for comment on the latest order.
According to the 26 May order, judge Atchley denied the Weaver’s motion to end receivership.
He also said the business was “insolvent by a considerable margin” and found that Uncle Nearest’s liabilities sit at around $207.9m.
That sum, the order says, includes over $120.8m that Farm Credit claims it was owed and at least $20m owed to a company called MP-Tenn in convertible promissory notes, and $45m owed to Advanced Spirits linked to a forward contract for sale and repurchase of filled whiskey barrels.
The order asks receiver Phillip Young to investigate if Grant Sidney has any assets “that rightly belong” to Uncle Nearest Green Distillery, Inc., and Uncle Nearest Real Estate Holdings, LLC, or other entities subject to receivership.
“As a ‘passive holding and investment entity,’ Grant Sidney does not have operations the receivership might disrupt,” the order added.
The order stated that “Uncle Nearest concealed its dealings with MP-Tenn LLC from Farm Credit and misrepresented the source of $20 million it obtained MP-Tenn”.
It also noted that the holding entity was “used by Fawn Weaver and Uncle Nearest as part of their scheme to hide and misrepresent the source of the $20 million Uncle Nearest received from MP-Tenn”.
A notice of appeal was subsequently filed in response to the judge’s order by the Weavers on 27 May, according to a filing with the Tennessee court, shared by Moore County Observer.
A filing made by Young on the same day, and also shared by the same publication, also suggests the receiver has “retained” a Nashville-based law firm to “advise the receiver on responding to a federal investigation”.
The filing does not confirm whether Uncle Nearest is involved in the investigation nor does it accuse any party of wrongdoing.
