Stillhouse Spirits sues Bacardi for $100m over claims of extortion

The CEO of US-based Stillhouse Spirits has filed a US$100m lawsuit against Bacardi accusing the producer of extortion, fraud and breach of contract, claims that Bacardi has said it will “defend vigorously”.

Hip-hop artist and celebrity G-Eazy is an investing partner and co-creative director of Stillhouse, which was founded by Brad Beckerman.

Brad Beckerman, the founder, CEO and chairman of US spirits brand Stillhouse Spirits, filed a lawsuit against Bacardi Limited yesterday at a court in Delaware.

Hip-hop artist and celebrity G-Eazy is an investing partner and co-creative director of the company, which Beckerman alleges is now in “mortal danger” due to the “financial malfeasance of Bacardi and the other financial partners”.

The lawsuit alleges that Bacardi, who acquired a minority stake in the brand in four years ago, convinced Beckerman to provide it inside access and control of Stillhouse through a series of false representations and promises of support.

To induce Beckerman to relinquish majority ownership and control of Stillhouse, Bacardi represented to Beckerman that it would in the future bring Stillhouse “in house,” by buying all of the equity of Stillhouse, including Beckerman’s, at a fair market price”, a press release from Stillhouse states.

The lawsuit claims that in February and March 2019 the company has seen record breaking success and sales, and is now worth in excess of $100 million. But that Bacardi has “schemed to take the company on the cheap”, and has “cut off funding for the company.”

Bacardi has instead presented a “take it or leave it” offer to all of the equity holders, to sell to Bacardi their interests in Stillhouse at substantially below market value – and if not funding ends.

The lawsuit states: “Bacardi has put a take-it-or-leave-it offer to the Board. Bacardi’s offer is for Stillhouse to transfer all of its assets to Bacardi for no upfront payment to the company or to any of the minority members.

“For the minority members, Bacardi has offered payments that are contingent upon Stillhouse reaching certain case volume thresholds and would not be paid out until at least five years from now.”

‘ON THE VERGE OF BANKRUPTCY’

Bacardi meanwhile has defended its position, saying that it has provided “substantial backing” for Stillhouse over the years but that the company had “continued to spend beyond the board-approved budgets” and “repeatedly failed to deliver the growth promised”, and was consequently now “on the verge of bankruptcy”.

In a statement, Bacardi said: “We made a minority investment in Stillhouse over four years ago because we believed it could be an exciting and disruptive product, and we provided the company with significant ongoing financial and other support.

“Despite our substantial backing, management repeatedly failed to deliver on the company’s business plan and Stillhouse is now on the verge of bankruptcy. Under the leadership of CEO Brad Beckerman, the company has repeatedly failed to deliver the growth promised, and continued to spend beyond the board-approved budgets.

“For nearly six months, we have been diligently working with the other shareholders to find a solution that would save the business. It is very unfortunate that Mr Beckerman would jeopardise Stillhouse’s ability to continue as a going concern by unilaterally filing this frivolous lawsuit just as we were nearing a mutually beneficial resolution.

“The complaint is filled with inaccuracies and misstatements, and we look forward to providing the entire story at the appropriate time. We intend to defend this action vigorously.”