Fawn Weaver fires back on insolvency, claims Uncle Nearest worth over half-billion
AI-generated summary reviewed by our newsroom.
- Weaver contests receivership and says company worth at least $600M.
- Receiver, Farm Credit report insolvency; receiver notes missing tax returns.
- Court will hear Feb. 9 on receivership, foreclosure risk and fraud investigations.
Uncle Nearest founder Fawn Weaver says her whiskey company isn’t insolvent, and is instead worth at least $600 million.
In new court documents filed ahead of a crucial Feb. 9 hearing in Tennessee, Weaver and her husband, Keith, rebutted recent statements by Kentucky lender Farm Credit and the receiver appointed to oversee the troubled bourbon brand.
U.S. District Judge Charles E. Atchley will hear arguments from the Weavers that the receivership, which began last fall, should end and that the spirits company should be turned back over to her and her hand-picked team “to avoid a preventable collapse.”
According to unsealed documents filed by receiver Phillip Young and by Farm Credit, the company does not have enough incoming revenue to pay ongoing expenses and has been shored up by Farm Credit, but otherwise is insolvent.
In an affidavit, Young said that if the company is returned to Fawn Weaver, Farm Credit likely will foreclose; however, liquidation likely will not cover the original secured $100 million debt, which began with loans in July 2022, let alone millions more in vendor debts he has uncovered.
Weaver said in her filing that the Nearest Green Distillery with surrounding 428 acres is worth $65 million; that Uncle Nearest’s barreled whiskey inventory is worth $78 million; that property on Martha’s Vineyard is worth $5 million and property in Cognac, France, is worth at least $2 million. She said a spirits industry expert is prepared to testify that the Uncle Nearest brand is worth at least $500 million.
Weaver said the receiver’s lack of any offers to purchase the Uncle Nearest assets for more than $100 million are due to a “flawed fire sale process” that is “in disarray.”
She pointed to an unorthodox letter sent to Judge Atchley by potential bidder NexGen2780, expressing interest in bidding $108 million for Uncle Nearest, as evidence that there is a market and that the receiver’s process hasn’t effectively found it. However, it isn’t clear that the NexGen bid has enough capital behind it, and at least one of the potential parties in the group has faced serious SEC scrutiny. No other bidder has been publicly identified.
Weaver pointed out that the receiver has not made a formal fraud allegation — something the receiver said in his filing he is not ready to do, although he said he identified a number of questionable transactions and is investigating many allegations of fraud made against the Weavers by shareholders, as well as allegations made by the Weavers against Farm Credit.
Farm Credit hasn’t filed a fraud allegation either, but the bank pointed out that the Weavers themselves, in a lawsuit they filed in a separate Tennessee court against former chief financial officer Michael Senzaki, “explicitly describes a company rife with fraud under the Weavers’ leadership.”
Weaver accused the receiver of providing “absolutely no financial information” for Uncle Nearest. Young has said he’s still reconstructing the company’s finances, which contain “incomplete, unreliable and non-reconciled books and records.”
But he also said in a footnote he believes creditors and shareholders were lied to.
“While the Receiver currently has no evidence that (the Weavers) had actual knowledge that false financial information was being distributed to creditors and shareholders, it is inaccurate to say that the Receiver has ‘cleared’ (the Weavers) of wrongdoing,” Young wrote. “The Receiver believes that (the Weavers), in the exercise of their fiduciary duties as officers and directors of the Company, should have known of the falsity of information being distributed; but he certainly cannot state that they did know.”
While Weaver’s filing addressed allegations about missing barrels, who can claim the house on Martha’s Vineyard and a disputed $20 million money transfer, it did not address the receiver’s claim about missing tax returns.
According to Young’s affidavit, Uncle Nearest has not filed tax returns since 2018. Young said he has attempted to rectify things on the state level, but the company may still face legal exposure.
