Balcones Dispute Headed For Mediation, Gag Order Lifted

October 19, 2014 – There are new developments in the ongoing dispute between Balcones Distilling founder Chip Tate and the Oklahoma City-based investor group that holds a majority stake in the Waco, Texas craft distillery. 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 of 170th District Court Judge Jim Meyer. Meyer ruled earlier this month that Tate was in contempt of court for not promptly returning a Balcones-owned computer, hard drive, and mobile phone after he was suspended in August.

The Waco Tribune and Whisky Advocate are both reporting that 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.

Tate told Whisky Advocate’s Fred Minnick that the dispute is headed for mediation, while the Tribune reports that two hearings have been scheduled for next month in Judge Meyer’s court. Meyer will hear arguments November 6 on whether the Balcones majority owners properly followed the company’s bylaws when they suspended Tate, and a November 20 hearing is scheduled on the distillery’s request to turn the temporary restraining order into a longer-lasting injunction. The 90-say suspension is scheduled to end around November 22, but Tate compared the dispute to a divorce in interviews with Minnick and the Tribune, saying that “either they’re going to buy me out and let me have my freedom…or they get bought out.” Tate’s 2013 agreement with PE Investors II LLC left him with a 27% ownership stake in Balcones and a three-year non-compete agreement.

So far, a grassroots online campaign to raise money to help pay Tate’s legal bills has raised $1,340 in its first five days, with a goal of raising $100,000. The #ISupportChipTate fund has pledged to use all donations to help pay Tate’s legal fees, with any remaining funds going to either help Tate buy out the majority investors or start a new distillery.

Monday afternoon, WhiskyCast’s Mark Gillespie spoke extensively by phone with Chip Tate. The entire interview is now  available at WhiskyCast.com. We are still waiting for a response from a spokesman for Balcones. This story will be updated as more details are available.

Editor’s note: Both the Waco Tribune and Whisky Advocate stories were published after this week’s episode of WhiskyCast was produced on October 18. We plan to have a complete update in the next episode of WhiskyCast October 25. This story was edited to reflect that one of the court hearings is scheduled for November 6 instead of 7 as originally reported, and that we will be publishing an interview with Chip Tate soon. 

Links: Balcones Distilling