Uncle Nearest is firing back at the lender seeking control of the whiskey company’s operations for allegedly failing to pay its debts.
Farm Credit Mid-America, a primary agricultural lender, is seeking the emergency appointment of a receiver to take over operations at Nearest Green Distillery – the business founded by Fawn Weaver, according to a complaint filed Monday in the U.S. District Court for the Eastern District of Tennessee in Chattanooga.
The lender alleges Uncle Nearest failed to meet its financial obligations, resulting in debts totaling an estimated $100 million. The complaint claims Uncle Nearest significantly misused multiple loan funds in several ways, and names the business itself, Uncle Nearest, Inc., Nearest Green Distillery, Uncle Nearest Real Estate Holdings, as well as CEO Fawn Weaver and her partner, Keith Weaver, whose inclusion he previously told BevNET appeared to be a deliberate effort to malign the husband-and-wife team on a personal level.
Farm Credit Mid-America requested that the court immediately remove leadership from control during the proceedings and install a “reputable turnaround firm at the helm of Uncle Nearest and determine whether there is a path forward to a profitable business.”
Uncle Nearest filed a response to the motion on Sunday, arguing that it has made multiple payments to the lender, and claimed that a former employee was responsible for fraudulently misrepresenting the company without leadership’s knowledge.
Uncle Nearest Blames Former CFO, Argues Receivership ‘Inappropriate’
The response from Uncle Nearest asserts that the lawsuit is mainly a result of a technical default caused by the company’s former CFO, and paints a picture of the two companies working together to find a resolution.
Among other accusations, Farm Credit Mid-America alleges that Uncle Nearest overstated the value of its inventory in borrowing base reports, inflating its loan eligibility and avoiding required repayments.
But Uncle Nearest argues that now-terminated CFO Michael Senzaki acted alone in overstating the company’s whiskey barrel inventory, which allegedly secured a $24 million credit increase from Farm Credit Mid-America. Uncle Nearest claims that the lender was informed about the discrepancy via inventory reports and a third-party investigation into Senzaki’s conduct – and is “uniquely positioned to know” about the fraudulent activity. The response and a declaration from Fawn Weaver emphasize that no other executives had knowledge of Senzaki’s activities.
As the whiskey company has worked to resolve the technical default caused by its former CFO’s reporting, Uncle Nearest has continued to make substantial payments to Farm Credit, including $9 million in 2024 and an additional $7.5 million lump sum earlier this year, the response states. Uncle Nearest asserts that payments were only temporarily paused under the guidance of a mutually approved third-party advisory firm.
Touching on the more salacious accusations, the lender also alleges that Uncle Nearest purchased a $2.2 million Martha’s Vineyard home through a non-loan party and mortgaged that property to another lender. But Uncle Nearest stated that it was not only “fully transparent” about the purchase and intended purpose of the property, but attached emails to the response illustrating social visits to the property from the lender’s leadership who “expressed unsolicited praise for the acquisition.”
The response concludes that the lender and its employees and agents “were actively involved in – and frankly acquiesced to – the exact circumstances that it is claiming somehow support a receivership.” It continues that the lender’s actions demonstrate over the past few months that it was not truly concerned that its collateral was in danger of being lost and that “the drastic and extraordinary remedy of receivership is both unwarranted and inappropriate.”
The initial hearing on the receivership request is scheduled for Thursday, August 7.
Until then, Fawn Weaver has not stayed quiet: The CEO asserted that the brand has had its strongest year in the market, and has asked her followers on Instagram to join in on “operation clear the shelves.”
“Let our distributors and partners know: Uncle Nearest is stronger than ever,” she wrote.
Go Deeper:
Uncle Nearest Distillery Faces $100 Million Lawsuit, Lender Seeks Receivership
Uncle Nearest Acquires Square One Organic Spirits
CBC Keynote: Uncle Nearest’s Fawn Weaver On Why Staying Small Wasn’t an Option
Six Questions with Katharine Jerkens, CBO of Uncle Nearest
Uncle Nearest Launches Mentorship Program to Cultivate Brand Advocacy, Bar Industry Leaders