Balcones - the End?

[bearmark]

To think that the judge could conclude all of this without ever hearing from the other side is really reaching. You have much more faith in the justice system than I do. Until he's heard from Chip (and other employees and observers), he really doesn't know anything except that the board is very upset and willing to take extreme measures. I'm thinking that he issued the order to allow some cooling off until he heard the whole story. I'd like to think that the judge has enough sense to see that this is a huge spat that has gotten out of control and that it warrants his attention. We shouldn't read more into this than the facts suggest. Drawing these conclusions about Chip Tate without ever having met him is a bit much.

[Harry in WashDC]

I don't know what the local rules of procedure are for the issuance of a temporary restraining order in the local Texas court (the 170th District Court) that issued this TRO. Nevertheless, in most jurisdictions TROs are one-sided - somebody goes to court and says, "Look at all this info I have. If the Court doesn't issue a temporary order limiting the actions of the other party, I could be irreparably harmed by those actions before I can get to court at a trial to resolve this dispute." The judge then weighs whether the evidence looks solid (i.e., it's not just a who-struck-John without pictures or I-SWEARONMYMOTHER'sGRAVE-that-he-just-appeared-out-of-thin-air) and if so THEN decides whether the complainant is likely to prevail at trial if all that info shown the Court is "true" and then decides whether irreparable harm prior to completion of full-blown litigation (i.e., a full trial) really is probable IF all that evidence is proven and the complainant prevails at trial (i.e., "wins"); IF answers to all these things are YES, then the complainant may get the temporary order, and the Court schedules a hearing (like the one scheduled in this case on September 18) on whether the TRO should be made a permanent injunction or should be modified or should be lifted. At that hearing, the "other party" gets to challenge and rebut the "solid" evidence presented in the first place. But, that's just a hearing on the TRO and whether it should stay in place prior to trial on the merits of the dispute; it's not a full trial and the parties can still go one to a full-blown trial if one of them wants to.

SO, we'll get to see on September 18 (unless the hearing is postponed for some reason) what Mr. Tate has to say about the order. We may still not get to hear details about the underlying dispute that caused the BOD to go to Court.

Books of legal arcana can be written about such. AND, getting caught in such a process is enough to glaze the eyes of seasoned attorneys who are watching from outside while causing many sleepless nights by inside attorneys on BOTH sides.

At least while my eyes were glazing, I THINK that's what happened. Later pragmatic experience did not change my thinking.

Edited September 7, 2014 by Harry in WashDC
postscript explaining WHY I rambled - see SO

[Harry in WashDC]

I don't know what the local rules of procedure are for the issuance of a temporary restraining order in the local Texas court (the 170th District Court) that issued this TRO. Nevertheless, in most jurisdictions TROs are one-sided - somebody goes to court and says, "Look at all this info I have. If the Court doesn't issue a temporary order limiting the actions of the other party, I could be irreparably harmed by those actions before I can get to court at a trial to resolve this dispute." The judge then weighs whether the evidence looks solid (i.e., it's not just a who-struck-John without pictures or I-SWEARONMYMOTHER'sGRAVE-that-he-just-appeared-out-of-thin-air) and if so THEN decides whether the complainant is likely to prevail at trial if all that info shown the Court is "true" and then decides whether irreparable harm prior to completion of full-blown litigation (i.e., a full trial) really is probable IF all that evidence is proven and the complainant prevails at trial (i.e., "wins"); IF answers to all these things are YES, then the complainant may get the temporary order, and the Court schedules a hearing (like the one scheduled in this case on September 18) on whether the TRO should be made a permanent injunction or should be modified or should be lifted. At that hearing, the "other party" gets to challenge and rebut the "solid" evidence presented in the first place. But, that's just a hearing on the TRO and whether it should stay in place prior to trial on the merits of the dispute; it's not a full trial and the parties can still go one to a full-blown trial if one of them wants to.

Books of legal arcana can be written about such. AND, getting caught in such a process is enough to glaze the eyes of seasoned attorneys who are watching from outside while causing many sleepless nights by inside attorneys on BOTH sides.

At least while my eyes were glazing, I THINK that's what happened. Later pragmatic experience did not change my thinking.

SO, we may get to hear why Mr. Tate thinks the TRO should be lifted, BUT we may not get to hear all the gruesome details about the underlying dispute. That may have to wait for a full trial. If there's going to be one.

[squire]

I deglaze with Bourbon Harry.

[callmeox]

I'm not sure that accusing a judge of taking bribes is the best place for this thread to go.

The thread is in a public forum that is indexed by multiple search engines so please use discretion.

[Richnimrod]

I'm not sure that accusing a judge of taking bribes is the best place for this thread to go.

The thread is in a public forum that is indexed by multiple search engines so please use discretion.

Read the; "Maybe" in the first line of my post, Ox.

If anyone reads this as impuning a particular jurist; it was certainly not my intention.

I was just pointing out that in the Detroit area the sort of jurisprudence I imply would not be exceptional... in fact, it might not make headlines if exposed. ....Just sayin'....

[mbroo5880i]

Relationships, working or personal, are tricky things. Then, when you add money to the picture, things can get crazy. I have seen too many families, friends, and small businesses split over seemingly small issues when it involved money.

[Capn Jimbo]

I don't know what the local rules of procedure are for the issuance of a temporary restraining order in the local Texas court (the 170th District Court) that issued this TRO... The judge then weighs whether the evidence looks solid (i.e., it's not just a who-struck-John without pictures or I-SWEARONMYMOTHER'sGRAVE-that-he-just-appeared-out-of-thin-air) and if so THEN decides whether the complainant is likely to prevail at trial if all that info shown the Court is "true"... SO, we'll get to see on September 18...

Exactly. This is not like a lover's spat, where TRO's are easily obtained to keep the parties apart to cool off. The TRO in this case was stunning in its breadth and detail - which in essence shut Tate down in every possible way, thus you can be sure there was evidence enough to establish cause. It's your second point - that at the hearing the company will be challenged in minute detail on what's "true". It goes without saying that the company would not have alleged any facts that they are not fully prepared to defend.

Those who have made "maybe" statements about the judge are wrong. The local judge is well aware of Tate's local status as a town hero, which has been well publicized. Accordingly you can be sure he has been scrupulous in being fair in his evaluation of the evidence and in his granting of a very comprehensive order. With this in mind, the TRO carries exceptional weight.

If premature conclusions have been drawn, these have been mostly by Tate's infatuated and rabid followers, whose clear conclusions were listed in the pro's and con's. Five pro's were listed and they all draw conclusions whose sum was clear: Tate "good", company "bad". This was precisely why there was need to present both pros AND cons in fair, compare and contrast fashion, for readers to consider, and thus to be able to fairly draw their own conclusions.

"I know Chip, he's a great guy and a genius, and he wouldn't do that" is less convincing than "A judge has examined the evidence and has granted a comprehensive and powerful restraining order". As far as moi is concerned, I conclude three things: where there's smoke there's fire, Chip Tate and Balcones Brimstone, lol...

[smokinjoe]

Exactly. This is not like a lover's spat, where TRO's are easily obtained to keep the parties apart to cool off. The TRO in this case was stunning in its breadth and detail - which in essence shut Tate down in every possible way, thus you can be sure there was evidence enough to establish cause. It's your second point - that at the hearing the company will be challenged in minute detail on what's "true". It goes without saying that the company would not have alleged any facts that they are not fully prepared to defend.

Those who have made "maybe" statements about the judge are wrong. The local judge is well aware of Tate's local status as a town hero, which has been well publicized. Accordingly you can be sure he has been scrupulous in being fair in his evaluation of the evidence and in his granting of a very comprehensive order. With this in mind, the TRO carries exceptional weight.

If premature conclusions have been drawn, these have been mostly by Tate's infatuated and rabid followers, whose clear conclusions were listed in the pro's and con's. Five pro's were listed and they all draw conclusions whose sum was clear: Tate "good", company "bad". This was precisely why there was need to present both pros AND cons in fair, compare and contrast fashion, for readers to consider, and thus to be able to fairly draw their own conclusions.

"I know Chip, he's a great guy and a genius, and he wouldn't do that" is less convincing than "A judge has examined the evidence and has granted a comprehensive and powerful restraining order". As far as moi is concerned, I conclude three things: where there's smoke there's fire, Chip Tate and Balcones Brimstone, lol...

Nice objective post on the situation. Your observations are spot on, IMO.

[TunnelTiger]

Slightly off topic but I had a couple delicious Bloody Marys made with Brimstone yesterday :cool:

[Harry in WashDC]

No further off topic than TT's - The True Blue 100 also makes a nice Bloody Mary, and don't forget to put Joe's bacon strip in it for garnish. That burnt buttered popcorn taste and the bacon fit the tomato juice perfectly. A few chunks of cucumber floating in there are nice, too. Only 10 days to the hearing . . .

[Josh]

Which will come to an end first, Balcones or this thread?

[squire]

Good question, six pages already and we're just warming up.

[SWC]

Plenty of legal experts to analyze the fraction of information available, right here right now. It's like TMZ and Judge Judy all in one thread. Impressive.

[Paddy]

Plenty of legal experts to analyze the fraction of information available, right here right now. It's like TMZ and Judge Judy all in one thread. Impressive.

And with bacon, Bloody Mary's and plenty of other assorted libations-where else we gonna go?

[SWC]

And with bacon, Bloody Mary's and plenty of other assorted libations-where else we gonna go?

That's a fair point.

[Ravensfire]

Transitions from a small place with a handful of people to a much larger enterprise can be tough. When that jump is fast because of outside money, it's really tough. Suddenly, the person who was completely in control doesn't have as much as they think. And sometimes they don't realize that for a while until there is some conflict. Corporations are ultimately run by the board and that can be difficult to accept when the founder becomes a minority owner.

If the investors were sharp (and from their actions here, I don't doubt that they are), the corporation owns the recipes and any experimental distillations. That would have been part of the their requirements to invest that much money - if Chip would suddenly die or leave, they would have to be sure that the corporation had all the knowledge it needed to continue to operate.

Board fights in general are ugly, ugly affairs. Small company board fights are worse though. Often the board members and company executives are good friends, sometimes close friends, and when it switches, you've harmed peoples pride. By going down the TRO route, it's more than just a slap in the face, it's a slap with a steel gauntlet. Relationships are probably irrevocably harmed and that's a bad thing between the board and president. There won't be much trust between the board and Chip which will probably poison the entire work environment.

I'll hope that somehow this can get fixed, but getting the courts involved like this is pretty hardcore. I'm sure that Balcones will continue for at least the next several years with their current products (and anything new already developed). I've got major doubts about anything new after that. I can't see Chip having any desire to return w/ the current board and I really doubt he'll be able to take over the Balcones board in a proxy fight. Hope there's there no non-compete for him (or else it's so totally unreasonable that it would get thrown out).

[squire]

Should continue and thrive with the expansion plains going forward.

[kickert]

We are all aware that any speculation is based on a single, limited source. But, I have a few general assumptions that I think are pretty easy and appropriate to make:

1.) Money has to be involved. I don't know of a major board fight that didn't involve money on some level.

2.) The board is either very dumb or very pissed off to take such a major step. They have to be aware of the huge risk of this maneuver. My guess is the later.

[Capn Jimbo]

Magic Eight Ball sez...

. . . . . . .

When I predicted that Tate would encounter investor conflict some weeks ago, I really thought we wouldn't know for some time.

Then - magically - all hell broke loose last week and it was the Shootout at Balcone Corral, and I was proved amazingly prescient. Even after Tate's alleged wild threats, I felt really, really bad for a guy that had it all going, but became his own worst enemy. Sadly I have had friends whose businesses ended the same way. We are truly big supporters of honest and pure craft distillers,

Not only was this a big fail for Tate, but also for the new and now well-funded Balcones and even worse for all the budding micro's out there. It's hard enough to get distribution and a little piece of shelf without this huge fail reflecting on them. Bacardi reliably produces and delivers their product, with machine like, drama-free precision.

But I'm gonna make a prediction anyway...

First the observations:

• 1. Both parties have LOTS to lose. Tate's career is rapidly going up in enough smoke, enough to use his secret process to smoke all remaining batches of his Brimstone Whisky. His reputation, credibility and trustworthiness have been greatly damaged, maybe permanently.
  As for the new Balcones, the investors have $10M at stake. Yes, they don't have to build the facility but this event may take years to sort out. Even if they withdraw, their own judgment and reputations have been damaged insofar as future acquisitions.
  Who's gonna hire Tate? Is the company ready to walk? These are grave concerns. Both had a huge stake in Balcones, but it's Tate who will suffer the more.
  2. Making nice will be hard, particularly for Tate. His alleged threats to hold his breath, to shoot board members, to destroy his ball and go home may gain him some concessions, but will they be enough for him? This is questionable. The board has to decide whether they can trust a guy who has taken such extreme alleged actions. After all, they just went through negotiations, reached an understanding and cut a deal - to fall apart in months? And so dramatically? Are they willing to double down and roll these dice again?
  Even in the beginning and under the best of conditions, the rapid scaling of Balcones was questionable, particularly as I believe these novel products and their market were not yet fully understood in terms of scalability. A reconciliation now adds even more levels of risk as mentioned above.
  

This is a really tough situation.

• 3. Still one has to consider that the company so far has only enforced a 90-day suspension, and has obtained a very serious restraining order to keep Tate on the shortest of leashes. If they were walking, this would not have happened. I believe they are open to reconciliation.
  4. Tate is harder perhaps impossible to read. The Court has ordered him into complete silence (which he bordered on violating with Chuck Cowdery). So we feel obligated to rely on his past. This grandiose gentleman seems to be an ego driven, hype believing, and thin-skinned micro-manager who seems to need to be in complete control, and to get all the accolades. If these impressions are true, he will have a LOT to dial back. Add to that the alleged threats and his road to recovery becomes ever harder.
  

Self-correction now will require soul searching and substantial self-reflection, with brutal self-honesty and analysis. Anger management must be strongly considered. And most important he will now have to share and compromise his dream and learn to play well with others to whom – for the first time – he must report: his hand selected investors which represent the majority ownership of new and much larger company.

Getting tougher by the minute, wouldn't you say?

But I'm not the Compleat Idiot of Rum for nothing.

In a spirit of compleat idiocy I'm willing to exit the Eight Ball Saloon and place a bet on the Shootout!

Contrary to popular opinion the company can continue without Tate, despite Cowdery's exclamation to the contrary. They can choose to withdraw and move their money to another investment. Tate's options are much more limited - he can either find God and bite the bullet, or find a new profession. He could also attempt to establish and build another micro, but I'm not sure starting from scratch again is in his DNA or within his personal financial capabilities. The chance of finding new investors now are somewhere between slim and none.

He's also tasted the wine, the glamour, and what appeared like the huge success he dreamed of, with the brass ring just beyond his grasp, but now snatched away. The company knows this. Tate thinks he's indispensable, but I believe the company holds the cards and will play them. They may offer him a role that keeps him aboard, but on a very, very short leash.

The position may well be one that gives him a corner of the new facility to play with a small still and to keep experimenting. Leave him with title enough for his ego – this might be the time for “Master Distiller†- , and put him on the road to do what he does best, gladhanding, speaking soaking up just enough spotlight to assuage his ego, but not enough to be perceived as the company and only as he refrains from undermining the company. Unfortunately Tate has demonstrated what appears to be an explosive unpredictability so the reconcilation must include an honest, strict, gradual and failsafe return.

Their position: " Chip, you're important but no man is indispensable, especially under these circumstances. You were the head distiller, but not the only distiller. We have a lot of money at stake, and you have made it very, very difficult for us to trust you. Your actions have damaged all of us, and unless we can somehow resolve our differences very quickly, it might be better for us to simply part friends and go our separate ways. With that in mind we're willing to give it another chance, but you must convince us that we can truly work together. Chip, it's up to you..."

Step up to the window...

My Odds are 3-5 (pays $3.20 on a $2 bet) he submits and works to come back. He's tasted the wine. Hey, not so fast! Even if he does the odds are 2-5 ($2.80) the company will have him. For you Europeans that'd be 1.60 and 1.40. Altogether the total odds are 2.24 Euro, 6-5 US, payout $4.48. For you non-betting folk (me) that's just short of a 50% chance..

Any takers?

[dcbt]

I officially have tiredhead...

[Quantum]

Tate's options are much more limited - he can either find God and bite the bullet, or find a new profession. He could also attempt to establish and build another micro, but I'm not sure starting from scratch again is in his DNA or within his personal financial capabilities. The chance of finding new investors now are somewhere between slim and none.

[SWC]

Capn Jimbo, you have bypassed all the subversive sarcasm offered so far, so let me just put it plainly: your level of commitment to this BS is approaching an almost creep like level, I feel like I should applaud your efforts. Please consider just talking about "what bottle I just opened up last night." I have a new found appreciation for that never ending bore.

[kickert]

In the craft distilling world, Chip is an icon, as we have seen by the outpouring of support from current distillers. I don't think he has to worry about his future in the industry. Even with this negative press, there are tons of micros out there that don't have anything going for them besides a desire to make whiskey. I would be willing to bet his phone has been ringing off the hook from start ups and established craft distillers alike offering him whatever terms he wants to come share his mojo with their company. Just think about the Charlie Sheen scenario.

[PaulO]

There is a picture of Mr. Tate in the Waco Trib article. Posing with all those little barrels makes him look like a giant. It looks like he's about 20' tall. The beard helps too.