It's Time to End the Legal Wrangling and Take Uncle Nearest Public

Both the receiver in the Uncle Nearest Inc. receivership case and the lender, Farm Credit Mid-America, have asked a federal judge to reject an emergency request to fast-track an appeal denying founder Fawn Weaver's attempt to move the case to bankruptcy court.

Before rehashing their arguments, let me offer a suggestion: Take Uncle Nearest public.

Farm Credit Mid-America wants its $108 million back. We doubt it cares how it gets it. Bankruptcy, sale of assets, whatever. In the courts, it may or may not recover all the $108 million. Fawn Waver wants to keep control of the company she created. That's not going to happen. But that's not to say shouldn't play a major role.

One thing is certain: Uncle Nearest as a brand will survive. The receiver says it is imperative that it do, and he's correct. As he notes, there are cultural and historical reasons why it must survive. Plus, it's simply a very, very good whiskey, the most awarded American whiskey in recent decades.

It's also obvious the company was mismanaged and undercapitalized. But that doesn't mean the company shouldn't survive, and that doesn't mean Fawn Weaver should not have a leading role in it, perhaps as CEO.

What she needs is a strong board of directors and an executive team thst complements her strengths. Weaver's major strength is she is an amazing marketer. She created the brand because she saw an article in The New York Times about this Black man who was Jack Daniel's master distiller and looked into it. One thing led to another, and soon she created the most successful new brand in recent decades.

So, Weaver and Farm Credit Mid-America can continue to burn the company's cash arguing over whether or not it should be in bankruptcy court. Or, it can (and should) go public.

But, first: How did it get into this mess. We haven't seen the financial records – the receiver says those were erased from the computer system – but it's a safe bet the company was vastly undercapitalized. So, how do you recapitalize the company?

• The fast and easy way is for Farm Credit Mid-America to agree to take stock in exchange for its $108 million loan to Uncle Nearest in exchange for a promise that the company goes public within, say, six months. Farm Credit sells its stock at the IPO.
• When the company goes public, it should have no debt, and enough cash in the bank to ensure its operation for at least six months.
• Fawn Weaver remains the CEO. Coming out of this disaster will require as many marketing skills as creating the company in the first place. But, she must also have a tip-notice Chief Operating Officer with a CFO background, preferably in alcohol beverages.
• The company needs a world-class board of directors, carefully selected to insure she has the right degree of oversight.
• We think it's important an offering be available to the brand's fans and not just to a few select institutional investors. We suspect there are plenty of Blacks who would invest as a matter of Black pride, and there are plenty of White investors who would invest because of the quality of its product.
• So individual investors have priority, but a major underwriter must be involved because you will need major investors also.

We think this plan is totally doable. It's a bit out of the box, but doable.

Bank to the legal wrangling this week: In essence, Farm Credit Mid-America and the receiver argue there is no emergency, and Weaver's motion simply repackaged arguments already pending in the broader reeceivership case.

The receiver, Phillip G. Young, is supposed to stabilze operations so the company can continue in business, but he argued in an earlier filing that Uncle Nearest is insolvent (Our plan solves the involvency) and its assets need to be sold off.

The legal question behind all the wrangling at the moment is whether Weaver can file bankruptcy papers in Uncle Weaver's name, given that the receivership order gave all executive power to the receiver.

In what amounts to a Hail Mary play, Weaver has also sought to send her appeal to the Sixth Circuit Court of Appeals, bypassing further action at the district court level. Both the receiver and Farm Credit oppose that, saying, in essense, the case doesn't meet the necessary criteria.

It's time to end the legal wrangling and take Unlcle Nearest public.