4th December, 2014 by Amy Hopkins

After months of fraught legal battles, Chip Tate, founding president of Texan craft whiskey distillery Balcones, has left the company after being bought out by its board of directors.

As reported by the Waco Tribune-Herald, board members of Waco-based Balcones have bought Tate’s remaining 27% stake in the distillery for an undisclosed sum. Under the terms of the buy-out, Tate will not be permitted to work in the distilling industry again until at least March 2016.

Tensions between Tate and members of PE Investors – a private equity firm that bought a majority stake in Balcones in February 2013 – have been growing in recent months.

In August this year, the board took out a restraining order against Tate, preventing him from entering the distillery or speaking with distillery workers and the media.

He was also found in contempt of court in early October for failing to return a computer and phone to the company as required.

While the board accused Tate of trying to derail Balcones’ expansion through his “unconscionable and reprehensible” behaviour, Tate said he had personal differences with PE leader Greg Allen, while the firm was displeased with his expansion cost predictions.

Since legal action ensued, Tate announced his intention to leave the distillery, which he built in 2008, if PE Investors stayed.

“My hope is the same as it has always been over the past few months which is that one of us must leave,” he told The Spirits Business in October. “This isn’t a great marriage anymore and we need to decide who gets to keep the house.

“If they are hell bent on keeping Balcones then they need to pay me my part and give me my freedom. We are moving back towards mediation, but I am most excited about making whiskey again.”

Dispute continues

Greg Allen has since informed the Waco Tribune that Tate was removed from the board yesterday (Wednesday 3 December). However, the publications claims that while the board argues Tate was fired, the distiller and his attorney claim he resigned from Balcones.

Reports suggest Tate initially offered to buy his investors out of the business, which they declined.

His position as president of Balcones will be taken over by the company’s chief operating officer Keith Bellinger. Upon announcing details of the distillery’s expansion into the 1923 Texas Fireproof Storage building, Balcones said operations had been running “smoothly” under distillery manager Jared Himstedt.

As legal action progressed in November, a judge ruled that the board’s decision to suspend Tate was invalid after both he and the board requested the court to clarify the company’s operating agreement.

A few weeks later, the board agreed to drop its temporary restraining order against Tate.

While Tate is not legally permitted to work in distilling until March 2016, he told The Spirits Business in October that he intended to remain in the trade.