Balcones Distilling founder Chip Tate claimed a partial victory in court this week when a judge sided with him in the dispute against the company's board of directors. In his summary judgement, the judge declared that the board could not take action without Chip's participation, meaning its recently brokered $15 million in funding and Chip's suspension were a violation of the company's bylaws, reports the Waco Tribune.
BACKGROUND: Recall, a power struggle at Balcones turned ugly in September when the board -- primarily made up of private equity investors from the PE Investors group -- was granted a temporary restraining order, enforcing a 90-day suspension of Chip. The board claimed Chip's "unconscionable and reprehensible" behavior could delay the $10 million distillery expansion project. [see WSD 09-04-2014 ].
Chip countered their claims with allegations that the private equity was trying to "unjustifiably take advantage of a craft distiller and take his ownership in Balcones." As Chip tells it, the problems started when he shared with them the company's ten-year financial projections [see WSD 10-24-2014 ]. The two parties subsequently tried to find an amicable solution to allow them to go their separate ways but were unable to do so, which is how they ended up in court.
INITIAL REACTIONS: "We were surprised and naturally disappointed by the court's ruling," says the board in a statement released to WSD.
Meanwhile, Chip tells WSD he is "gratified and relieved" by the ruling. "Thankfully, those [temporary restraining order] claims will go away now. I can only hope that the investors will have the decency to publicly apologize for manufacturing lies about me to serve their own ends -- truly reprehensible and unconscionable behavior."
What has been clear from the beginning of this battle is that these two parties cannot continue on together. Chip says he is willing to buy out the investors and move on- something they have not been willing to do in the past. "I sincerely hope something happens before the damage they are causing to Balcones becomes too great to fix."
The board agreed something has to give: "But given this ruling, it does make sense for Chip to either buy us out, or be bought out, because the court essentially has declared that the current owners can't put any more of their money into the Company. Staying in a holding pattern is also not the best thing for the employees, customers and our loyal consumers because at some point we will run out of money."
Both parties hope for a quick resolution.
ZODIAC BRINGS ON FORMER RUSSIAN STANDARD EXEC AS CHIEF. Dallas-based Zodiac Spirits has appointed former Russian Standard exec Dan Liquori as its new chief. The release from Zodiac says he will be responsible for re-launching the brands, among other things. Since 2006, Dan has held various roles at Russian Standard Vodka including vp of market strategy & business development, vp of sales - South, East and West, and Southern division and US military manager. He has also led regional sales teams at Remy Cointreau USA and Antinori Estate Wines.
MGP INGREDIENTS THIRD QUARTER GOING STRONG. MGP Ingredients, independents supplier of spirits and owner of Lawrenceburg Distillers Indiana (former Seagram's distillery), grew volumes by 11.5% to $63.7 million in the company's third quarter ended September 30. Net sales for the nine months were $194 million, an increase of 20.2%. "Our profit growth this quarter is a result of continued improvement in our distillery products segment, and reflects a favorable shift towards premium spirits," says MGPI chief Gus Griffin.
"You'll become known for doing what you do. It's a simple saying, but it's true...The only way to start being asked to do something you want to do is to start doing that thing on your own."
- Jonathan Harris
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