A federal judge in Tennessee has ordered Black-owned Nearest Green Distillery to be placed under receivership, removing founder Fawn Weaver and her husband, Keith, from operational control for today. The August 14th ruling came after lender Farm Credit claimed the Weavers and their Uncle Nearest whiskey brand defaulted on more than $108 million in loans and were close to missing more payments.
The court said the move was needed “to safeguard the disputed assets and administer the property” while working toward “a final, equitable distribution of the assets if necessary.” The judge noted that “the court can craft a receivership order that still allows the Weavers to market Uncle Nearest and further build the brand,” which could help “mitigate any potential brand damage.”
The decision follows a gag order issued last week that barred the Weavers from selling any Uncle Nearest assets. Farm Credit also supports the idea of Weaver continuing to promote the brand despite her removal from management.
The court found “it is unclear whether Uncle Nearest is or will remain solvent,” which puts the security of the loans in jeopardy. Both sides acknowledged the loan amount had grown by $24 million due to “misrepresentations of Uncle Nearest’s barrel inventory.”
The Weavers blamed their former chief financial officer, Mike Senzaki, for the false numbers, claiming they were unaware of the deception; however, the judge found the situation troubling.
“Given that this $24 million was supposed to be secured by the illusory whiskey barrels, that these barrels do not exist strongly suggests that the loans are not adequately secured,” the judge wrote.
Both parties must submit proposed receiver candidates by midnight on August 20th. Farm Credit Mid-America of Louisville first sued in Tennessee, alleging default on $100 million in loans. The Weavers insist they are “victims of fraud.”
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