DUANE SHERRILL
Tullahoma News
A federal judge has issued a gag order in the case of Nearest Green in its $100 million lawsuit filed against the distiller by their creditor, Farm Credit Mid-America.
Farm Credit claims that Nearest Green has defaulted on its loan and has asked federal Judge Charles E. Atchley to put Nearest and its related businesses under receiver control to ensure collateral does not go missing after the plaintiff claims the borrower overestimated its inventory of whiskey barrels–which is its main collateral–by over $21 million. Nearest would like to try to make things right with their creditor themselves without receiver oversight, suggesting in the court hearing this past Thursday that such a move could hurt the brand, thereby hurting its worth.
While Judge Atchley ponders if he will put a receiver in control of Nearest Green, the federal judge has taken steps to make sure the case is not tried in the media, as he issued a gag order Monday morning.
The order came at the request of the plaintiff, who maintained that members of Nearest Green, specifically CEO Fawn Weaver, had taken to social media regarding the issues in the case.
“The parties, including each of their representatives, officers, and directors, SHALL refrain from making any statement through any medium, whether oral or written, including, without limitation, social media posts or statements to the press, regarding these proceedings, the Lender’s Collateral, the proposed Receivership Assets, or any other party to these proceedings without the permission and approval of this Court until the Court has ruled on the Receiver Motion.,” the judge directed. “For the avoidance of doubt, while public statements to the press and on social media are prohibited, all parties are permitted to engage in private discussions with current and potential shareholders/stakeholders, including investors.”
The judge had questioned during the recent hearing if his order was needed to keep the parties quiet, and the plaintiff’s attorney strongly suggested it was necessary. Judge Atchley, while issuing the gag order, was somewhat reluctant during the hearing as he said he did not want to squash anyone’s First Amendment rights.
Along with a gag order, the judge has placed a freeze on any movement of assets that would impact Farm Credit’s collateral while he decided the fate of the receiver request.
“Defendants, and all persons or entities, including employees, agents, creditors, banks, investors, shareholders, officers, directors, subsidiaries, affiliates, owners or others, affiliated with the Defendants (the “Company”), SHALL be enjoined and restrained from in any way disturbing, interfering, influencing, or affecting any and all issues that are subject of the proceedings or the proposed Receivership, including, without limitation, the “brand” of Uncle Nearest,” the judge decreed. “This prohibition includes, without limitation, sales or other transfers of any of the Lender’s Collateral and the proposed Receivership Assets, including any such transfers that are prohibited by the Loan Documents, such as investments, advances, or transfers by Uncle Nearest in, or on behalf of, any non-Loan Party (as such term is defined in the Credit Agreement) or Dispositions (as such term is defined in the Credit Agreement), pursuing actions or proceedings which affect the Lender’s Collateral or the proposed Receivership Assets, to the extent the same would interfere with or disturb these proceedings, without the permission and approval of this Court, until the Court has ruled on the Receiver Motion. For the avoidance of doubt, the Company is authorized to operate its business in the ordinary course; however, no barrel sales shall occur.”
While the judge has not said when he will rule on receivership, he did pledge that his ruling will come soon.
