By Duane Sherrill | Special to The Times
CHATTANOOGA — Will placing Nearest Green under receivership hurt the brand and in turn negatively impact its creditor’s collateral? That’s the question that federal Judge Charles Atchley Jr. is likely pondering after hearing two hours of arguments Thursday afternoon at the federal courthouse in Chattanooga as Farm Credit Mid-America is asking a receiver to be placed over the distilling company to protect the $100 million it is owed.
“I will not be giving an answer today, but it will come quickly,” the judge said after the emergency hearing.
During the hearing, it was not disputed that Nearest Green is in default in their $108 million in loans–an amount that increases by $28,000 each day. Nearest Green attorney Rocklan King also admitted that the $10 million payment scheduled to the creditor this coming week will also not be paid on time. King also admitted to the judge that Chapter 11 bankruptcy had been discussed, but said owners Fawn and Keith Weaver would like to find a way to repay their debt while reassuring the creditor that the company can maintain solvency–all without a receivership or bankruptcy.
{Editor’s Note: This article is brought to thanks to an editorial partnership between The Lynchburg Times and The Tullahoma News. To read more of their articles, click here.}
“It looks like you’re out over your skis,” the judge commented after hearing evidence that Nearest Green could not make their payments despite testimony by Keith Weaver that the company is growing.
“We are the fastest growing whiskey company in America,” Keith Weaver testified, suggesting it is a cash flow problem, not as solvency problem. He also noted they had made payments of $9 million and 7.5 million in 2024.
He pointed to issues caused by his former Chief Financial Officer where barrel inventory was overestimated. The inventory, it was revealed, was overestimated by $21 million.
“He wasn’t fit for his role,” Keith Weaver told the judge, noting that private investigators are looking into the CFO’s conduct and that information will go to the Nearest board and then to the Securities and Exchange Commission and the Department of Justice.
The judge noted that it was still the Weaver’s CFO, even if the CFO was not correctly doing his job.
Keith Weaver told the judge that placing a receiver to run the business would be “catastrophic” to the Uncle Nearest brand, noting his wife Fawn is the face of the brand.
“Losing Fawn Weaver will injure the company–100%,” he testified, adding Fawn was busy “selling whiskey in Florida” and therefore could not be at the hearing.
The attorneys for Farm Credit made Keith Weaver admit the company was in default of its loans on cross-examination.
“That’s not good for the brand, is it?” he was asked on the stand, with the plaintiff team pointing out Nearest had still not been paying its bills or providing records even after their former CFO was let go in early 2024. “This isn’t a billion-dollar company, is it Mr. Weaver?”
In the end, the plaintiff attorneys said they needed to be an “adult in the room” when it comes to maintaining solvency for Nearest’s creditors.
“It’s going to do more harm than good,” King warned in summing up the defense’s case, asking the judge to prescribe something less than receivership.
Judge Atchley pointed out that once things get to his court, it’s not good for anyone.
“No one wins when things come to the courthouse…except maybe the attorneys,” the judge declared.
Along with asking that Nearest be put under receivership, Farm Credit requested the judge put down an order in the interim to preserve the collateral which is mainly made up of barrels of whiskey, which the plaintiff worries may get sold off.
The judge said he will issue an order to preserve the collateral. The plaintiff also asked the judge to limit what can be said about the case in a quasi-gag order, noting Fawn Weaver had taken to social media.
“Do I really need to put down an order to keep your mouth shut?” the judge asked, to which both sides nodded in the affirmative. The judge said he will consider the quasi-gag order, but did not want to trample on First Amendment rights. •
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