Pride Goeth Before the Fall

 

Fawn Weaver and company, startled by the Harold Washington
animatronic at the DuSable Museum in Chicago, June 25, 2024.

The Uncle Nearest saga began eight years to the day before the above picture was taken.

That was when Clay Risen revealed Nathan 'Nearest' Green's story to the world, or at least to readers of the New York Times, in an article headlined "Jack Daniel’s Embraces a Hidden Ingredient: Help From a Slave."

Fawn Weaver credits that article with inspiring her to create the Uncle Nearest whiskey brand. These days, she and the brand are in a heap of trouble.

Eight years is a good age for American straight whiskey. At least to my taste, eight to twelve years is the sweet spot for whiskey aged in new, charred oak, which bourbon and whiskeys like it must be.

But I digress.

To build a premium whiskey brand from nothing to approximately 150-thousand cases a year seems like a remarkable accomplishment, especially for someone with no previous industry experience and little more than a good story. The liquid, though perfectly fine for what it is, is not extraordinary. That's not why people buy it. It's the story or, I should say, stories, Green's but also Weaver's. 

They are inextricably linked.

From the beginning, I've been impressed by Weaver. She seemed to make all the right moves and experience nothing but success. Seeing her perform in person, during her 2024 book tour, just increased my estimation, even though by then I had heard troubling rumors that all in Tennessee was not as it appeared.

But, in person, Weaver absolutely owns the room. She's dazzling. She casts a spell and makes you want to believe. She held her own last night and two weeks ago on ABC's "Shark Tank" TV show. (Both episodes were recorded last summer, before the current troubles.) 

There have been many facts and counter-facts floating around. Weaver is all over social media but the receiver and the bank she owes $100M+ to only speak through their filings with the U.S. District Court for the Eastern District of Tennessee, where Case No. 4:25-cv-38 is being adjudicated.

Let's focus on that $100M number, which is closer to $200M when you add the unsecured creditors. I have it on good authority that she raised a similar amount, about $200M, from investors. Suddenly, that 150-thousand cases per year after eight years doesn't seem so impressive, if they spent $400M to get there. For all intents and purposes, the company is broke. Like everything else, the value of its tangible assets is in dispute, but it's way south of $100M, let alone $400M.

Even more disputed is the value of its intangible assets, specifically the Uncle Nearest brand, which ranges from zero to infinity.

My previous post on this subject was a reaction to those who assume the whole thing was a scam from the beginning. If it was, it was a poor job, because that money appears to be gone and not in anybody's pocket. Judge Charles Atchley Jr., who is presiding over the case, used the "out over your skis" idiom at one point. Based on everything we know, that seems as good an explanation as any. 

Judge Atchley is expected to rule soon on Weaver's motion to end the receivership and the receiver's motion to add seven other Weaver businesses to the package.  

Weaver's latest gambit, filing bankruptcy for a company she no longer controls, which didn't last 48 hours, and also filing a defamation suit against the bank which, even though she is a Californian whose company is in Tennessee and the bank she's suing is in Kentucky, she filed in New York. It all just seems weird at this point, like she's grasping at straws. 

Self-confidence will only take you so far. 

Don't Judge Uncle Nearest Too Harshly

 

The Uncle Nearest Distillery in Shelbyville, Tennessee.

I'd like to take a moment to offer some perspective on the Uncle Nearest situation. This is especially for folks who jumped to the conclusion that it was a scam from jump.

FAT Brands is a global franchising company in the fast-casual, quick-service, casual dining, and polished casual dining segments. Some of their better-known brands are Fatburger, Johnny Rockets, Ponderosa and Bonanza. (Those last two are revivals of brands from the 60s.)

FAT is bankrupt and their debt is so big, even debtors who thought they were safe may be impacted.

According to Bloomberg, FAT has $1.4 billion in bonds supported by just $40 million in annual earnings. Like Hooters and T.G.I. Fridays before it, FAT pledged virtually all its earnings to a debt structure that became too much to bear.

It's not the same as Uncle Nearest, of course, but in both cases the scheme fell apart when the market for the company's products suddenly changed, and they didn't have enough wiggle room in their financing to adapt.

That doesn't change anything. I'm just saying many businesses are a house of cards in the sense that a sudden change beyond their control can bring it all crashing down.