A federal judge tossed Fawn Weaver's attempt to put Nearest Green Distillery into Chapter 11 Bankruptcy Act protection, ruling the Uncle Nearest founder lacked the authority to act on behalf of the financially troubled distillery she founded.

Instead, U.S. Bankruptcy Judge Suzanne Bauknight ruled Phillip G. Young Jr., the court-appointed receiver for the distillery, was the only person authorized to act on behalf of the company. Banknight then dismissed Weaver's case and also granted a motion for dismissal filed by Farm Credit Mid-America, the creditor who claims it is owed more than $100 million.

Young then asked the federal district court handling the receivership to sanction Uncle Nearest's founder, Fawn Williams, for the bankruptcy filing. He said Weaver signed the bankruptcy petitions despite a receivership ordr that vested him with the powers of the companies officers and managers.

Weaver signed Bankruptcy Act petitions on behalf of Uncle Nearest Inc., Nearest Green Distillery Inc., and Uncle Nearest Real Estate Holdings LLC, and Young, the receiver, asked that Weaver "and/or" her attorneys be sanctioned $25,000 for each petition.

He noted the receivership court had repeatedly told the Fawn Weaver, her husband and their attorneys that only the rreceiver had the legal authority to act on behalf of the company – including the authority to file a perition in Bankrupcy Court.

To make matters worse, Young said in a petition to the receivership court, Weaver "went on a media blitz immediately afterward announcing end of this Court’s ordered receivership," issuing a press release2 prepared by Ms. Weaver and releasing "a six-minute Instagram video discussing her filing of the unauthorized petitions. . . . This follows a troubling pattern about which the Receiver has previously warned this Court, of Ms. Weaver ignoring this Court’s orders to refrain from trying this case in the media and/or social media.

"The unauthorized bankruptcy filings and Defendant Fawn Weaver’s press releases announcing the same has created substantial confusion among Uncle Nearest’s customers, vendors, distributors, employees, and shareholders – not to mention the confusion and trepidation it has caused among potential buyers of its assets," Young's petition said, adding:

"Indeed, within just a few hours after the unauthorized bankruptcy filings, the Receiver received dozens of emails, telephone calls and texts from various constituents inquiring about how these bankruptcy filings impact the ongoing business of these receivership entities. This has had an immediate and negative impact upon the operation of these businesses."

Weaver's Response

In a separate filing, Weaver responded that the receivership order did not "categorically and exclusively" preclude "preclude filing of a bankruptcy petition by anyone other than the receiver." Weaver's "signing the bankruptcy petitions was not unlawful or frivolous and was undertaken only after review of the status of the applicable law by several sets of experienced counsel," her attorneys said in opposing the motion for sanctions.

No action was take directly against property of the companies, nor did it "immediately cause any divesting of control over the assets by the Receiver," Weaver's response says. And, it adds, the receivership court itself "specifically suggested to the Parties that this case should be in bankruptcy court."

In an affidavit attached to her filing, Weaver states that prior to the Bankruptcy Act filing, she consulted with expeerienced bankruptcy attorneys across the country as well as protessional trustee and restructuring professionals, and was consistently advised that federal law does not prohibit Uncle Nearest or its affiliates from filing for bankruptcy without consultation with the receiver, despite the receivership order.