A federal judge has ordered a receivership for Tennessee’s Nearest Green Distillery after the business defaulted on more than US$100 million in loans.
This means that the distillery will be taken out of the hands of founder Fawn Weaver and her husband, Keith, as reported by the Lexington Herald Leader.
Lender Farm Credit Mid-America PCA filed a federal lawsuit on July 28, alleging that Tennessee whiskey producer Uncle Nearest defaulted on $100 million in loans.
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The lawsuit, filed in U.S. District Court in the Eastern District of Tennessee, names Uncle Nearest, its Nearest Green Distillery, and co-founders Fawn and Keith Weaver as defendants. According to Farm Credit Mid-America, Uncle Nearest owes more than $108 million across several loans and accrued interest.
Farm Credit, in its complaint, says the Weavers and the distillery had failed to properly respond to repeated requests for information and a consensual resolution to “myriad defaults,” which include failure to pay the principal and interest payments many times. The complaint says the distillery has been in default since January 2024.
Farm Credit also claims the Weavers used proceeds from a loan to purchase a home in Martha’s Vineyard. It alleges that the property was mortgaged in a separate $1.5 million loan involving another lender.
Per the complaint, the distillery “provided inaccurate reports on whiskey barrels held as collateral; sold barrels to generate cash to pay past-due obligations to parties other than Farm Credit; sold millions of future receipts and revenue streams at a discount to at least four different parties on at least four separate occasions without telling Farm Credit; failed to maintain any net income each month; and failed to maintain a net worth of at least $100 million during 2024 as required by the loan documents,” as reported by the Lexington Herald Leader.
Fawn Weaver denied the allegations, stating that many of these fraudulent actions were taken by the distillery’s chief financial officer, who has now been fired.
Farm Credit still asked a judge to appoint a receiver to take over the distillery. On August 14, the judge granted the receivership.
The court documents read: “Farm Credit asserts that the receivership factors weigh in its favour. Defendants, unsurprisingly, dispute this contention. They argue that appointing a receiver would be inappropriate given the brand damage it would entail, the availability of less drastic remedies, and the fact that many of the issues underlying the parties’ dispute were caused by the unauthorised actions of Uncle Nearest’s former CFO, Mike Senzaki.
“The court appreciates defendants’ position, but it finds that appointing a receiver is necessary under the circumstances.”
The court went on to state that there is not “adequate security” for Farm Credit’s loan, proven by the “lack of certainty surrounding Uncle Nearest’s solvency”. The “issues surrounding Uncle Nearest’s barrel inventory” further support this, it added.
It is not clear what roles co-founders Fawn and Keith Weaver will take following the receivership. However, the court suggested that they can continue to be publicly involved in the brand.
“The court can craft a receivership order that still allows the Weavers to market Uncle Nearest and further build the brand. By keeping the Weavers involved in this way, they could mitigate any potential brand damage that a receivership might entail,” the court said.
In a post on Instagram over the weekend, Fawn Weaver said she still runs the business. “Don’t believe the fake news. Some reports claim I no longer own Uncle Nearest, that I’m not running it. Let me be clear. I built this company, I own this company, I run this company and my leadership team, who have all been with me for six to eight years, are right here, building alongside me,” she stated.
She added: “Our team remains unshaken and unmoved. If that ever changes, you’ll hear it directly from me and I know you will respond accordingly.”
The Lexington Herald Leader reports that the Weavers and Farm Credit must present additional briefing on their proposed receiver candidates by midnight August 20.
Uncle Nearest Premium Whisky was founded by Fawn Weaver to honor the memory of Nearest Green, an enslaved African American who helped Jack Daniel start his distillery. The distillery became the first in U.S. history to honor an African-American whiskey maker and one of the few distilleries in the country owned and operated by a black, female lead.
Despite the effect of COVID-19 on many businesses, particularly black businesses, Fawn Weaver weathered the storm to top the chart of bestselling African-American-owned whisky brands.
In 2021, the brand became the best-selling African-American-owned and founded spirit brand in the U.S. after selling nearly 1.5 million bottles of its sought-after super-premium whiskey.
Last May, Uncle Nearest reached unicorn status, a feat few black businesses have been able to achieve. This followed the brand’s capital raise for its French subsidiary, which was oversubscribed. It is now experiencing problems.
