How Trump's Tariffs Have Impacted Uncle Nearest Receivership

President Trump's tariffs are adding to the tragedy of financially troubled Nearest Green Distillery.

The good news is that Phillip G. Young, the court-appointed receiver, to the court overseeing the receivership that he has finalized the terms of the sale of the vineyards in Cognac, France, and is now working through the process required by the French government to complete the sale.

The bad news is two-fold. First, Young has had little success in finding a buyer for the French chateau. "A recent story in a French spirits publication reported the production of cognac is down by 90%, in large part due to the impact of American tariffs," Young told the court, adding, "This has resulted in many Cognac chateaus being offered for sale." It appears the chateau is headed for auction.

The second piece of bad news for Uncle Nearest is that "as with any prolonged receivership, employees have grown concerned about the future of their employment and have begun to seek employment elsewhere. In the last quarter, the Receivership Entities lost a key operational employee," Young reported. He said he remains concerned about the potential impacts of future departures if a sale is not executed soon.

One reason employees are worried about their future is that the potential buyer who had signed a letter of intent backed out.

Company, Brand 'Still Have a Future'

In his report, Young said he "continues to believe the company and brand still have a future. . . A buyer of these assets can still rehabilitate this brand with an infusion of new capital and more disciplined financial and operational leadership."

Young said he is currently negotiating with three serious potential buyers of Uncle Nearest's assets, "all of whom expressed serious interest in purchasing substantially all assets related to the Uncle Nearest whiskey operations." Once an agreement is signed, he expects to file a Chapter 11 bankruptcy to effect the sale of assets, he said.

Meanwhile, Humble Baron, which had operated an on-site restaurant, bar, and live music venue at the distillery, was put into Chapter 7 liquidation. Young is working to retake the spaces at the distillery occopied by it and Shelbyville Barrel House. Both Humble Baron and the Barrel House were owned by Keith Weaver, husband of Fawn Weaver, the founder of the Uncle Nearest entities.

Financial Reporting

For the third quarter, ended Sept. 27, the business received $4.3 million, some $783,181 more than budgeted. Operating disbursements were $3,159,040, some $63,294 less than budgeted, resulting on a positive operating cash flow of $1,164,645, some $719,887 less than anticipated. Included in the operating receipts were $818,000 from the sale of the "Martha's Vineyard House. Obviously, if that sale had not occurred, operations would have produced a negative $101,887 cash flow.

Farm Credit MidAmerica, Nearest Green's principal creditor, put in only $450,000, some $2.6 million less than budgeted. Most of the $2.6 million variance includes $2 million budgeted for debtor-in-possession financing that has not occurred yet.

Because of the anticipated bankruptcy filing, payroll was switched to a new servicer which will generate annual savings of $342,000.

However, the professional receivership fees totaled $1.8 million, resulting in a negative cash flow of $218,091.