The legal battle surrounding Uncle Nearest whiskey has taken another turn as the court-appointed receiver recently accused the company’s primary lender of helping alleged financial fraud go unnoticed for years.
The Legal Drama Continues
In a counterclaim filed in federal court, receiver Phillip G. Young Jr. alleges that Kentucky-based Farm Credit Mid-America ignored warning signs and failed to follow basic lending safeguards while approving tens of millions of dollars in loans to Uncle Nearest, the premium whiskey brand founded by Black entrepreneurs Fawn Weaver and her husband, Keith Weaver, in 2017 in Tennessee.
The filing marks the latest development in the unraveling of Uncle Nearest, the award-winning whiskey brand named after Nathan “Nearest” Green, a formerly enslaved man who became the first known African-American master distiller in the United States and taught Jack Daniel how to make Tennessee whiskey. The company has been under court-appointed receivership since last year after Farm Credit alleged the business defaulted on more than $100 million in loans.
According to the receiver, former Chief Financial Officer Michael Senzaki allegedly falsified financial records, forged corporate documents, inflated inventory values, and concealed millions of dollars in liabilities while serving as the company’s primary contact with Farm Credit.
The counterclaim alleges Farm Credit approved 28 separate loan draw requests totaling nearly $67 million between July 2022 and August 2023, despite every request allegedly being submitted solely by Senzaki without verification from Weaver, the company’s CEO and majority shareholder.
“Farm Credit failed to implement verification procedures that any competent lender would employ,” Young said in the filing.
The receiver claims the lender overlooked obvious red flags, including repeated requests from a single executive, rapidly increasing loan balances, and a lack of direct communication with the company’s chief executive.
The filing also alleges Farm Credit benefited financially as the company’s borrowing increased, collecting approximately $400,000 in origination and amendment fees while expanding Uncle Nearest’s revolving credit facility from $35 million to nearly $67 million.
Young argues that the lender’s actions allowed Senzaki’s alleged misconduct to continue undetected for years, significantly worsening the company’s financial collapse.
The allegations come as Uncle Nearest remains embroiled in multiple legal disputes.
On July 6, Young also urged a federal appeals court to reject Weaver’s attempt to revive the company’s Chapter 11 bankruptcy case. The receiver argues Weaver lacked the legal authority to place the company into bankruptcy because control had already been transferred to the court-appointed receiver. Court filings note that Weaver’s own attorney acknowledged she could not validly authorize the bankruptcy filing while the receivership was in effect.
Meanwhile, the receiver continues efforts to sell Uncle Nearest’s assets, including the Uncle Nearest brand and the Nearest Green Distillery, in hopes of recovering value for creditors.
Farm Credit has not yet publicly responded to the receiver’s latest counterclaim, and the litigation remains ongoing. The allegations in the filing have not been proven in court, and no final rulings have been issued on the receiver’s claims against the lender.
