Ouch! It's sad to report but...
... Chip Tate of Balcones Whiskey has now been found in contempt of Court and for good cause. As should be abundantly obvious to all except for his small crew of denialists/sycophants, his past and present actions seem entirely consistent and self-destructive. His fate seems largely self-determined and he now appears to be paying the price. His best move - long past I'm afraid - would been have to face the fact that he chose to give up control and to - however reluctantly - cooperate with the company, proceed with the expansion and preserve what was a good reputation. And move forward.
To the contrary thumbing your nose at the Court yet - by allegedly failing to abide by the TRO, flouting the court order, delaying court appearances, destroying data and continuing to communicate with the media, including Chuck Cowdery (yes, I pointed that out too) - was predictably not well received by the Court, as should now be abundantly obvious. A wise man knows when to hold em, and when to fold them.
His contempt is detailed here:
http://www.wacotrib.com/news/business/j ... b6da8.html
At this writing a hearing to determine Tate's punishment for being found in contempt was to be held two days ago. Also to be determined will be whether the TRO will now become a temporary injunction, no doubt with new restrictions. I take no joy in Tate's fate, but there's comes a point when we all must step back, observe and accept his actions for what they are, and trust that justice is being done.
Time to fold em Chip...
Report to the Principal's Office Dept: Chip Tate...
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Capn Jimbo
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Report to the Principal's Office Dept: Chip Tate...
Last edited by Capn Jimbo on Thu Oct 23, 2014 9:40 am, edited 1 time in total.
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Capn Jimbo
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Another discussion about this at:
http://baylor.247sports.com/Board/10092 ... s-31103454
While Tate seems to draw a bye at bourbonstraight.com (mostly driven by Chuck Cowdery), the boys at Baylor seem to understand the situation in a more businesslike fashion. What I find interesting now is that it seems the Court has either not held an hearing to exact and specify his punishment, has issued that order without a further hearing, or has yet to make a final ruling.
It may well be that Tate has finally seen the light, and realizes that he needs Balcones more than they need him. Have the parties asked the Judge for a continuance to bang out a settlement?
http://baylor.247sports.com/Board/10092 ... s-31103454
While Tate seems to draw a bye at bourbonstraight.com (mostly driven by Chuck Cowdery), the boys at Baylor seem to understand the situation in a more businesslike fashion. What I find interesting now is that it seems the Court has either not held an hearing to exact and specify his punishment, has issued that order without a further hearing, or has yet to make a final ruling.
It may well be that Tate has finally seen the light, and realizes that he needs Balcones more than they need him. Have the parties asked the Judge for a continuance to bang out a settlement?
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Capn Jimbo
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Moi (on the 17th):
" What I find interesting now is that it seems the Court has either not held an hearing to exact and specify his punishment, has issued that order without a further hearing, or has yet to make a final ruling.
It may well be that Tate has finally seen the light, and realizes that he needs Balcones more than they need him. Have the parties asked the Judge for a continuance to bang out a settlement?
Bear, sometimes I even amaze myself, but once again, did I call it or what, lol! Just two days later (yesterday), the following was published:
(Credit: http://whiskycast.com/balcones-dispute- ... er-lifted/ )"Balcones Dispute Headed For Mediation, Gag Order Lifted
"A hearing scheduled for this Wednesday (October 22) in which Tate was scheduled to be sentenced after being held in contempt of court for violating an August restraining order appears to have been taken off the docket... terms of the restraining order blocking Tate from speaking to reporters about the case have been relaxed, with Tate now able to discuss at least part of the case publicly.
However, Tate is still not allowed to enter the Balcones facilities or communicate with employees, and his absence was conspicuous at a Balcones open house to show off plans for a new $15 million downtown Waco distillery last Tuesday."
The key facts:
1. Tate's ego remains unbridled. Now that he has avoided a punishment hearing for his contempt, he now claims that the company "made it all up". Unfortunately, the court already had made the determination that his actions were in contempt of the Court's earlier TRO.
2. The company (Balcones) is clearly going forward and intends to produce LOTS of whiskey, as the $15M financing for the new Scottish stills seems now to have been completed. With or without Tate the demand has skyrocketed. Balcones is clearly now committed to continue without him, ie it seems they don't need him.
3. Tate has made clear he does not intend to return to Balcones if the current ownership (PE) remains, ie he's not likely returning. His attitude seems: buy me out, I'll buy you out or GFY.
4. The Tate groupies have established a crowd funding effort for their GFY hero at the appropriately named "gofundme". Perfect. Only a bit more than a $1000 (about 1% of their goal has been met).
5. Tate's hand chosen "brand ambassador", Winston, as well the guy who actually did much of the distilling while Tate hopscotched around the globe (Himstedt) have both remained with the company. Indeed, they may well be happier with Tate gone:
http://www.wacotrib.com/news/business/b ... 49458.html"Himstedt, who has been distillation manager from the beginning of Balcones, said he works with people who have “great palates” and can participate in refining the taste of the whiskey.
“In some ways it’s become a lot more communal,” he said. “We’ve taken a team approach to things that had one person doing them before. That process is kind of nice.”
and...
"Winston Edwards, the company’s “brand ambassador,” said what makes Balcones distinctive is the human touch, as well as insistence on expensive grains and high-quality oak barrels."
The company reportedly recently earned yet another set of awards with product not blended by Tate.
Flat Ass Bottom Line:
It's important to note that although the Court seems to have given the parties the chance to work it out, two further hearings are already set in November. The clock is ticking loudly. Despite his bluster and continued denials, Tate remains in contempt and most of the TRO remains in force. With a three year no-compete and the looming prospect of drawn out litigation Tate would appear to be in big, big trouble. The company appears committed to going forward, while Tate seems to have been abandoned by those who knew him the best.
I sincerely doubt he is in any position to buy out the current owners, nor do the majority investors seem anxious to sell. Tate surely wants out of the no-compete, and the only real question left is how much he can get for his 27% interest, or if he can miraculously assemble a buyout. If he has ready backers they have not been identified. If Tate manages to free himself, it will be years before he produces much new product ready for sale. He will have to do it on his own, with or without "gofundme", as it is questionable that independent investors can be assumed to bet serious money now in such a volatile situation.
Last, it is well to understand that Tate's products - however unique and despite any "awards" - were rather overpriced and got checkered reviews. He may not be the distilling/blending genius he believes himself to be. Frankly, were it not for his seemingly unbounded ego, he would not have made the bed he is now caused to sleep in. He is the product - however unique - of his own distillated fate.
Stay tuned...
*******
Regarding mediation:
http://www.wacotrib.com/news/business/b ... 49458.html
What happened in Tate's words (good read)
http://whiskyadvocate.com/whisky/2014/1 ... ks-freely/
Last edited by Capn Jimbo on Thu Oct 23, 2014 10:46 am, edited 7 times in total.
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Capn Jimbo
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Can we talk, er mediate?
Talk about sacred cows, what a hoot! The post immediately above was also posted at Straightbourbon.com (a lovely site btw), with the exception that quotes were not used but instead simply summarized in my own words (they have a strict policy on copyright). Actually, isolated quotes to illustrate a point are perfectly fine under the Fair Use Doctrine.
No matter, that really wasn't the issue. The issue: that this post earned a relatively violent response from the moderators.
It seems that there are a couple of sacred cows at the STR8 folks corral: Chuck Cowdery and Chip Tate. Cowdery holds forth and insofar as bourbon is considered to be the final authority. Tate is considered a boy genius of the second coming, lol. Contradicting either one is like speaking out at the Shillery and being "liberated".
As most of the posters here know full well.
Although I have every respect for Chuck (with whom I've communicated for some years), we parted company over Jim Murray's take on "bourbon" being stored in ex-sherry containers. I fully agreed with Murray, but Chuck and I agreed to disagree, a lovely thread and life went on, if not a bit grumpily for my friend.
http://www.straightbourbon.com/forums/s ... 1c30e6d5dc
The Tate matter was quite another thing. The STR8-boyz are in deep, deep love with Tate. They can't wait to go camping with him, lol. So soon after starting another thread - "The (Balcones) beat goes on..." leading with the post just above this one, I received this "notification":
Now if anyone can find any insults of any member (Tate excepted) or of the site in the preceeding post, kindly let me know. If I was guilty of anything, it was to simply and clearly disagree and with enough detail to back up my take and linking the sources (Whisky Advocate, and the Waco Tribune). No matter that I'd somehow managed to anticipate, in order: Tate's likely confrontation, the actual confrontation, his guilt/contempt, and last that a mediation was in the wings.
There's more than a bit of lucky guesses in these, but what really seemed to perturb the Tate-r-tots, apart from speaking ill of their beloved, was that I somehow managed to be right and right, and right again. Ouch! That must surely have hurt. So like the climate change deniers facing mounting and undeniable evidence, they turned to the only solution they had.
Liberate the idiot (and his posts), keep calm and carry on in blissful denial.
Flat Ass Bottom Line
1. I have always supported Chuck Cowdery, a good man and one who speaks out ala moi. Good on him. I will not speak ill of him. Lighten up, my friend.
2. My posts were fair and as always, fully documented. I stand by them. As much as I support craft distillers, Tate has been his own worst enemy almost every step of the way. Compare to Charbay or Phil Prichard who didn't sell out for "big-time" glory.
********
A Tate-r-Tot speaks at Whiskey Advocate:
"Micromanaging Fools! This kid is a Mad Genius. Loan him whatever he needs 15 30 50 million and get out of his bleeping way – kiss his ring everyday – and roll your tongues off the ground as you bear witness to the biggest one man-made worldwide whisky Empires never to be seen again."
Tate Interview at Whiskycast:
http://whiskycast.com/files/Chip_Tate_i ... 141020.mp3
Talk about sacred cows, what a hoot! The post immediately above was also posted at Straightbourbon.com (a lovely site btw), with the exception that quotes were not used but instead simply summarized in my own words (they have a strict policy on copyright). Actually, isolated quotes to illustrate a point are perfectly fine under the Fair Use Doctrine.
No matter, that really wasn't the issue. The issue: that this post earned a relatively violent response from the moderators.
It seems that there are a couple of sacred cows at the STR8 folks corral: Chuck Cowdery and Chip Tate. Cowdery holds forth and insofar as bourbon is considered to be the final authority. Tate is considered a boy genius of the second coming, lol. Contradicting either one is like speaking out at the Shillery and being "liberated".
As most of the posters here know full well.
Although I have every respect for Chuck (with whom I've communicated for some years), we parted company over Jim Murray's take on "bourbon" being stored in ex-sherry containers. I fully agreed with Murray, but Chuck and I agreed to disagree, a lovely thread and life went on, if not a bit grumpily for my friend.
http://www.straightbourbon.com/forums/s ... 1c30e6d5dc
The Tate matter was quite another thing. The STR8-boyz are in deep, deep love with Tate. They can't wait to go camping with him, lol. So soon after starting another thread - "The (Balcones) beat goes on..." leading with the post just above this one, I received this "notification":
Preacher, is that you?"You have been banned for the following reason: Disregard for site rules. Insulting this site and its members. Date the ban will be lifted: Never"
Now if anyone can find any insults of any member (Tate excepted) or of the site in the preceeding post, kindly let me know. If I was guilty of anything, it was to simply and clearly disagree and with enough detail to back up my take and linking the sources (Whisky Advocate, and the Waco Tribune). No matter that I'd somehow managed to anticipate, in order: Tate's likely confrontation, the actual confrontation, his guilt/contempt, and last that a mediation was in the wings.
There's more than a bit of lucky guesses in these, but what really seemed to perturb the Tate-r-tots, apart from speaking ill of their beloved, was that I somehow managed to be right and right, and right again. Ouch! That must surely have hurt. So like the climate change deniers facing mounting and undeniable evidence, they turned to the only solution they had.
Liberate the idiot (and his posts), keep calm and carry on in blissful denial.
Flat Ass Bottom Line
1. I have always supported Chuck Cowdery, a good man and one who speaks out ala moi. Good on him. I will not speak ill of him. Lighten up, my friend.
2. My posts were fair and as always, fully documented. I stand by them. As much as I support craft distillers, Tate has been his own worst enemy almost every step of the way. Compare to Charbay or Phil Prichard who didn't sell out for "big-time" glory.
********
A Tate-r-Tot speaks at Whiskey Advocate:
"Micromanaging Fools! This kid is a Mad Genius. Loan him whatever he needs 15 30 50 million and get out of his bleeping way – kiss his ring everyday – and roll your tongues off the ground as you bear witness to the biggest one man-made worldwide whisky Empires never to be seen again."
Tate Interview at Whiskycast:
http://whiskycast.com/files/Chip_Tate_i ... 141020.mp3
And you got banned for this post?Capn Jimbo wrote:Moi (on the 17th):
" What I find interesting now is that it seems the Court has either not held an hearing to exact and specify his punishment, has issued that order without a further hearing, or has yet to make a final ruling.
It may well be that Tate has finally seen the light, and realizes that he needs Balcones more than they need him. Have the parties asked the Judge for a continuance to bang out a settlement?
Bear, sometimes I even amaze myself, but once again, did I call it or what, lol! Just two days later (yesterday), the following was published:
(Credit: http://whiskycast.com/balcones-dispute- ... er-lifted/ )"Balcones Dispute Headed For Mediation, Gag Order Lifted
"A hearing scheduled for this Wednesday (October 22) in which Tate was scheduled to be sentenced after being held in contempt of court for violating an August restraining order appears to have been taken off the docket... terms of the restraining order blocking Tate from speaking to reporters about the case have been relaxed, with Tate now able to discuss at least part of the case publicly.
However, Tate is still not allowed to enter the Balcones facilities or communicate with employees, and his absence was conspicuous at a Balcones open house to show off plans for a new $15 million downtown Waco distillery last Tuesday."
The key facts:
1. Tate's ego remains unbridled. Now that he has avoided a punishment hearing for his contempt, he now claims that the company "made it all up". Unfortunately, the court already had made the determination that his actions were in contempt of the Court's earlier TRO.
2. The company (Balcones) is clearly going forward and intends to produce LOTS of whiskey, as the $15M financing for the new Scottish stills seems now to have been completed. With or without Tate the demand has skyrocketed. Balcones is clearly now committed to continue without him, ie it seems they don't need him.
3. Tate has made clear he does not intend to return to Balcones if the current ownership (PE) remains, ie he's not likely returning. His attitude seems: buy me out, I'll buy you out or GFY.
4. The Tate groupies have established a crowd funding effort for their GFY hero at the appropriately named "gofundme". Perfect. Only a bit more than a $1000 (about 1% of their goal has been met).
5. Tate's hand chosen "brand ambassador", Winston, as well the guy who actually did much of the distilling while Tate hopscotched around the globe (Himstedt) have both remained with the company. Indeed, they may well be happier with Tate gone:
http://www.wacotrib.com/news/business/b ... 49458.html"Himstedt, who has been distillation manager from the beginning of Balcones, said he works with people who have “great palates” and can participate in refining the taste of the whiskey.
“In some ways it’s become a lot more communal,” he said. “We’ve taken a team approach to things that had one person doing them before. That process is kind of nice.”
and...
"Winston Edwards, the company’s “brand ambassador,” said what makes Balcones distinctive is the human touch, as well as insistence on expensive grains and high-quality oak barrels."
The company reportedly recently earned yet another set of awards with product not blended by Tate.
Flat Ass Bottom Line:
It's important to note that although the Court seems to have given the parties the chance to work it out, two further hearings are already set in November. The clock is ticking loudly. Despite his bluster and continued denials, Tate remains in contempt and most of the TRO remains in force. With a three year no-compete and the looming prospect of drawn out litigation Tate would appear to be in big, big trouble. The company appears committed to going forward, while Tate seems to have been abandoned by those who knew him the best.
I sincerely doubt he is in any position to buy out the current owners, nor do the majority investors seem anxious to sell. Tate surely wants out of the no-compete, and the only real question left is how much he can get for his 27% interest, or if he can miraculously assemble a buyout. If he has ready backers they have not been identified. If Tate manages to free himself, it will be years before he produces much new product ready for sale. He will have to do it on his own, with or without "gofundme", as it is questionable that independent investors can be assumed to bet serious money now in such a volatile situation.
Last, it is well to understand that Tate's products - however unique and despite any "awards" - were rather overpriced and got checkered reviews. He may not be the distilling/blending genius he believes himself to be. Frankly, were it not for his seemingly unbounded ego, he would not have made the bed he is now caused to sleep in. He is the product - however unique - of his own distillated fate.
Stay tuned...
*******
Regarding mediation:
http://www.wacotrib.com/news/business/b ... 49458.html
What happened in Tate's words (good read)
http://whiskyadvocate.com/whisky/2014/1 ... ks-freely/
Why?
It's nothing more than someone namely you expressing an opinion.
What a bunch of wankers.
Like you say agree to dis-agree no need to get your knickers in a twist over an opinion.
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Capn Jimbo
- Rum Evangelisti and Compleat Idiot
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Thanks Dai...
But this reminds me of a certain co-poster here who came to the conclusion that it was better to tell the truth and accept the predictable "liberation", than to join in the circle jerk at the Shillery. You know you're dealing with great prejudice if (a) there's an identifiable "leader" (like the Preacher) and (b) evidence of near total and safe agreement with him/her.
In this case the "leader" was/is Chuck Cowdery whom they believe speaks for bourbon, just as the Preacher presupposes that he speaks for rum. To be fair, I actually like and respect Cowdery for 90% of what he says and does. Still the mark of the charismatic (or in this case "Crotchety") leader it that 90% isn't good enough. As for the circle jerks who follow him seem unwilling to accept that no one is perfect.
BTW, I have defended Cowdery more than once on the net against those who resent his strong opinions. Unfortunately, he seems unable to tolerate an equally competent difference of opinion, and is quick to name-call.
At straightbourbon.com it's was hard to find anyone who disagreed with Tate as being the boy genius of whiskey, particularly after he'd been annointed as such by Cowdery. After I'd joined the thread on "Balcones - the end?", a few other posters started to tentatively speak out. This is typical, as there are always posters who fear speaking out without someone else taking the lead, but my "liberation" has shut them down once again. A shame.
That thread was "closed", but after my "liberation" was then reopened as "Balcones - Chip speaks out". As could have been predicted, the replacement thread is both short, and dominated by a few sycophants who posted quick shots about how they were awaiting my counter, and going back into Tate-r-Tot praise mode".
*******
http://www.straightbourbon.com/forums/s ... 253c56ed79
But this reminds me of a certain co-poster here who came to the conclusion that it was better to tell the truth and accept the predictable "liberation", than to join in the circle jerk at the Shillery. You know you're dealing with great prejudice if (a) there's an identifiable "leader" (like the Preacher) and (b) evidence of near total and safe agreement with him/her.
In this case the "leader" was/is Chuck Cowdery whom they believe speaks for bourbon, just as the Preacher presupposes that he speaks for rum. To be fair, I actually like and respect Cowdery for 90% of what he says and does. Still the mark of the charismatic (or in this case "Crotchety") leader it that 90% isn't good enough. As for the circle jerks who follow him seem unwilling to accept that no one is perfect.
BTW, I have defended Cowdery more than once on the net against those who resent his strong opinions. Unfortunately, he seems unable to tolerate an equally competent difference of opinion, and is quick to name-call.
At straightbourbon.com it's was hard to find anyone who disagreed with Tate as being the boy genius of whiskey, particularly after he'd been annointed as such by Cowdery. After I'd joined the thread on "Balcones - the end?", a few other posters started to tentatively speak out. This is typical, as there are always posters who fear speaking out without someone else taking the lead, but my "liberation" has shut them down once again. A shame.
That thread was "closed", but after my "liberation" was then reopened as "Balcones - Chip speaks out". As could have been predicted, the replacement thread is both short, and dominated by a few sycophants who posted quick shots about how they were awaiting my counter, and going back into Tate-r-Tot praise mode".
*******
http://www.straightbourbon.com/forums/s ... 253c56ed79
Last edited by Capn Jimbo on Thu Oct 23, 2014 1:16 pm, edited 1 time in total.
Just read the thread on straightbourbon forum. First thought that come into my head was w**kers but, I don't want to get personal it's not me, that was just the thought that came into my head.
Like I always say put up your version whether it be fact or opinion don't get personal and agree to dis-agree that way you can have a nice debate.
Like I always say put up your version whether it be fact or opinion don't get personal and agree to dis-agree that way you can have a nice debate.
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Capn Jimbo
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All said and done...
We have two parties at extreme odds with completely opposing reports of the happenings. The differences seem to be that the majority stockholders spoke clearly, legally and specifically while Tate's position has been expressed with far less clarity and more grandiosity (the spirit of Texas). With limited information the blogging public is limited to making the best of the dribs and drabs of information as they have been revealed.
Tate seems willing to self-destruct if he does not retain his Presidency and control, a demand that now seems remote. OTOH, the company has indeed put money - LOTS of it - on the line for a huge expansion in production. Balcones' working staff seems to have remained, demand continues to have grown, and the product continues to win awards, this time without Tate.
The company seems committed to going forward, and I'd guess with some real success. I'm sure there was a point when they'd have preferred that Tate have been part of that effort - after all, who wants to dump the charismatic and popular founder before the transition? No one in their right mind.
Something must have happened...
I'll say it again: if the company had plans to ease him out, they'd have waited until well after a successful transition to the new facility was complete. That's just common sense. Therefore, it's not hard to imagine that something very unusual happened and that something can be assumed most likely todo with the founder himself.
Was Tate cooperative? Or not? Or did he fight every little change? Tate's interview was revealing when he noted issues he resisted like daily reports, new travel and expense protocols, attendance at board meetings, multiple signatures required on checks and the like. These are actually quite trival and realistic in business (but apparently not to a Tate). This is just business as usual for almost any company, but seemed somehow offensive to a guy that was reportedly VERY independent, and who ran his own show as he saw fit.
That all changed when a group ponies up $15M, and as well posed by the interviewer at Whiskycast "...doesn't the person(s) who pays the piper get to call the tune?" In general, they do and should. In disputes, a board meets and, discusses any issues and votes. How? We don't know, but apparently Tate lacked the seats to prevail. Tate referred to an "operating agreement" regarding responsibilities and permissions, but never really specified how and by whom it was allegedly violated.
Mediation in the next week will be crucial:
No matter, if this mediation doesn't work (and I hope it does), then the Court will decide fairly and without prejudice and that will be that. So for now, all remains at the level of best guesses, and upon speculations that are not completely frivolous, but which are all that can possibly be extrapolated from the process.
The lines (and swords) have been drawn, but in my view the company holds most of the cards, unless they were indeed "making it up", which is not particularly likely. Unless they were, Tate's hand is based on the now legal equivalent of "two in the chest" and destroying the operation. It is possible he is willing to risk his own legal destruction and the destruction of a brand that he feels is his and may therefore cease with him?
If true such a scorched earth tactic may have worked to a degree anyway, as now a mediation has been entered, an outcome that would not have been proposed or engaged if both parties didn't feel they had something to gain. Both or one would have backed off.
Can we guess? Maybe.
My guess now? A tough one.
I believe Balcones can prosper without Tate more than Tate can prosper without Balcones, but neither as well as they would have together. Balcones staff is intact with key people like their ambassador and new head distiller doing a fine job, with three striking large stills being installed, with orders going through the roof, and with two new Awards being earned by Balcones sans Tate, just this month.
As far as Tate is concerned, his interview implies that he may not have a ready group of replacement investors, that he has been ordered out of the facility by the Court, and that his hands are tied under a 3-year "no compete" plus the fact that he still faces possible punishment for contempt, two hearings having been shortly scheduled for an injunction and other remedies.
Thus the mediation is critical to both parties, but would seem especially so for Tate. If the mediation fails, and Tate loses the November 6th hearing, Molly bar the door...
Flat Ass Bottom Line
I remain a huge fan of craft distillers, especially one like Chip Tate who really did start from nothing and who succeeded to the point of being recognized for his innovation, if not quality. I'm so sorry he chose to embark on a mega-expansion that he appeared unprepared to handle. He deserves the fruits of his efforts.
To me he presented as a hands-on, in-control kind of guy that operates in such a personal, and from the gut kind of way that his best answer would have been to scale up much more gradually. His mega-leap - driven by a certain grandiosity - turned out to be a mega-problem, especially as the new structure left him with little real control. It simply wasn't his money.
But all said, what's done is done and he must now learn to compromise and make the best of the hand he dealt himself. The fact that the company agreed to a mediation leaves the door of compromise opened at least a crack. They will be operating as hard-lined businessmen, while he will be operating as a craftsman with a vision who claims "I just want to make whiskey". This will be terribly difficult based on the initial demands of both parties.
Is Tate willing to bite his lip, accept a modest buyout and start over? Is the company willing to allow him the complete freedom to do so, knowing that he has been unwilling to comment on the post-Tate product and awards? Both will now have to know and trust that neither party will further speak ill of the other. Can Tate envision becoming the "Master Distiller" who reports daily and who will operate under close supervision? Ad infinitum...
As a former mediator I can tell you this is a very, very challenging mediation. Still, I've conducted mediations with much more animosity than this one. My perception is that the company will be easier to deal with, but that is at best an informed guess. It may be that Tate's scorched earth entry may be enough to allow a real compromise, or not. In listening to Tate's interview, I'm not much impressed with the claims, but more with a certain tone that may impliy a readiness to reach across the aisle. I believe there are a few things that the company can offer that at this point may be acceptable.
Both parties know the other is/are dead serious. I am confident the industry and the public all want these two to get together, to respectfully make nice with one another, and to commit to working very, very hard to bring things back together. Balcones (as it is) and Tate will both do MUCH better together then they will apart.
*******
Balcones post-Tate Awards:
http://whiskiesoftheworld.com/sites/def ... 282%29.pdf
We have two parties at extreme odds with completely opposing reports of the happenings. The differences seem to be that the majority stockholders spoke clearly, legally and specifically while Tate's position has been expressed with far less clarity and more grandiosity (the spirit of Texas). With limited information the blogging public is limited to making the best of the dribs and drabs of information as they have been revealed.
Tate seems willing to self-destruct if he does not retain his Presidency and control, a demand that now seems remote. OTOH, the company has indeed put money - LOTS of it - on the line for a huge expansion in production. Balcones' working staff seems to have remained, demand continues to have grown, and the product continues to win awards, this time without Tate.
The company seems committed to going forward, and I'd guess with some real success. I'm sure there was a point when they'd have preferred that Tate have been part of that effort - after all, who wants to dump the charismatic and popular founder before the transition? No one in their right mind.
Something must have happened...
I'll say it again: if the company had plans to ease him out, they'd have waited until well after a successful transition to the new facility was complete. That's just common sense. Therefore, it's not hard to imagine that something very unusual happened and that something can be assumed most likely todo with the founder himself.
Was Tate cooperative? Or not? Or did he fight every little change? Tate's interview was revealing when he noted issues he resisted like daily reports, new travel and expense protocols, attendance at board meetings, multiple signatures required on checks and the like. These are actually quite trival and realistic in business (but apparently not to a Tate). This is just business as usual for almost any company, but seemed somehow offensive to a guy that was reportedly VERY independent, and who ran his own show as he saw fit.
That all changed when a group ponies up $15M, and as well posed by the interviewer at Whiskycast "...doesn't the person(s) who pays the piper get to call the tune?" In general, they do and should. In disputes, a board meets and, discusses any issues and votes. How? We don't know, but apparently Tate lacked the seats to prevail. Tate referred to an "operating agreement" regarding responsibilities and permissions, but never really specified how and by whom it was allegedly violated.
Mediation in the next week will be crucial:
No matter, if this mediation doesn't work (and I hope it does), then the Court will decide fairly and without prejudice and that will be that. So for now, all remains at the level of best guesses, and upon speculations that are not completely frivolous, but which are all that can possibly be extrapolated from the process.
The lines (and swords) have been drawn, but in my view the company holds most of the cards, unless they were indeed "making it up", which is not particularly likely. Unless they were, Tate's hand is based on the now legal equivalent of "two in the chest" and destroying the operation. It is possible he is willing to risk his own legal destruction and the destruction of a brand that he feels is his and may therefore cease with him?
If true such a scorched earth tactic may have worked to a degree anyway, as now a mediation has been entered, an outcome that would not have been proposed or engaged if both parties didn't feel they had something to gain. Both or one would have backed off.
Can we guess? Maybe.
My guess now? A tough one.
I believe Balcones can prosper without Tate more than Tate can prosper without Balcones, but neither as well as they would have together. Balcones staff is intact with key people like their ambassador and new head distiller doing a fine job, with three striking large stills being installed, with orders going through the roof, and with two new Awards being earned by Balcones sans Tate, just this month.
As far as Tate is concerned, his interview implies that he may not have a ready group of replacement investors, that he has been ordered out of the facility by the Court, and that his hands are tied under a 3-year "no compete" plus the fact that he still faces possible punishment for contempt, two hearings having been shortly scheduled for an injunction and other remedies.
Thus the mediation is critical to both parties, but would seem especially so for Tate. If the mediation fails, and Tate loses the November 6th hearing, Molly bar the door...
Flat Ass Bottom Line
I remain a huge fan of craft distillers, especially one like Chip Tate who really did start from nothing and who succeeded to the point of being recognized for his innovation, if not quality. I'm so sorry he chose to embark on a mega-expansion that he appeared unprepared to handle. He deserves the fruits of his efforts.
To me he presented as a hands-on, in-control kind of guy that operates in such a personal, and from the gut kind of way that his best answer would have been to scale up much more gradually. His mega-leap - driven by a certain grandiosity - turned out to be a mega-problem, especially as the new structure left him with little real control. It simply wasn't his money.
But all said, what's done is done and he must now learn to compromise and make the best of the hand he dealt himself. The fact that the company agreed to a mediation leaves the door of compromise opened at least a crack. They will be operating as hard-lined businessmen, while he will be operating as a craftsman with a vision who claims "I just want to make whiskey". This will be terribly difficult based on the initial demands of both parties.
Is Tate willing to bite his lip, accept a modest buyout and start over? Is the company willing to allow him the complete freedom to do so, knowing that he has been unwilling to comment on the post-Tate product and awards? Both will now have to know and trust that neither party will further speak ill of the other. Can Tate envision becoming the "Master Distiller" who reports daily and who will operate under close supervision? Ad infinitum...
As a former mediator I can tell you this is a very, very challenging mediation. Still, I've conducted mediations with much more animosity than this one. My perception is that the company will be easier to deal with, but that is at best an informed guess. It may be that Tate's scorched earth entry may be enough to allow a real compromise, or not. In listening to Tate's interview, I'm not much impressed with the claims, but more with a certain tone that may impliy a readiness to reach across the aisle. I believe there are a few things that the company can offer that at this point may be acceptable.
Both parties know the other is/are dead serious. I am confident the industry and the public all want these two to get together, to respectfully make nice with one another, and to commit to working very, very hard to bring things back together. Balcones (as it is) and Tate will both do MUCH better together then they will apart.
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Balcones post-Tate Awards:
http://whiskiesoftheworld.com/sites/def ... 282%29.pdf