G-Eazy-Backed Liquor Startup Stillhouse Sues Bacardi for $100M Claiming Extortion, Fraud & More
Brad Beckerman, founder of spirits startup Stillhouse that counts rapper G-Eazy as a celebrity promoter, investor and co-creative director, filed a $100 million lawsuit against Bacardi Limited and…
UPDATE: We’ve included a new statement below from Bacardi about the lawsuit.
Brad Beckerman, founder of spirits startup Stillhouse that counts rapper G-Eazy as a celebrity promoter, investor and co-creative director, filed a $100 million lawsuit against Bacardi Limited and associated companies and individuals for fraud, extortion, breach of fiduciary duty and other charges in Delaware state court on Wednesday (March 27).
In the lawsuit, Beckerman states that Bacardi — an early investor in Stillhouse along with financial partners Americana Investment, Quadrant Capital Advisors and Angel Holdings, LLC — offered financial support in exchange for a controlling interest in Stillhouse, with the promise to eventually purchase remaining equity in the company at a fair market price. Instead, he alleges, they coerced him and other investors to sell their interests in the company at below market value by holding up further funding that had been promised.
“Bacardi convinced Beckerman to provide it inside access and control of Stillhouse through a series of false representations and promises of support,” the lawsuit states. “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.”
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The lawsuit also alleges that through their majority ownership, Bacardi has prevented Stillhouse from seeking out alternative sources of financing, thereby cutting off the company’s cash flow and damaging its relationships with vendors and retailers including Wal-Mart, Albertsons, Vons, Costco, Target and BevMo. Among other things, the lawsuit states the supplier of Stillhouse’s eye-catching steel cans has stopped all production of those cans and “related items” due to the financial “stranglehold” the company has been placed in. Additionally, Beckerman claims without funding from Bacardi, he will soon be forced to lay off nearly all of Stillhouse’s employees and wind down operations.
The lawsuit estimates Stillhouse’s current market value at $100 million, noting the liquor company shipped nearly 50,000 nine-liter cases in 2018 and is on pace to ship over 70,000 nine-liter cases this year. Further, it claims that Stillhouse has “valuable” patents and trademarks pending relating to its “innovative” steel cans.
“The effect of Defendants’ wanton scheme has been catastrophic to Beckerman personally,” the lawsuit states. “Because of Defendants’ malfeasance, Beckerman has suffered damages in excess of $100 million. Because of the egregiousness of the conduct, punitive damages are also appropriate.”
In addition to Bacardi and associated companies named in the suit, individuals named in the suit include Bacardi vice chairman Barry E. Kabalkin, Bacardi executive in-house counsel Scott Roades and Thomas Brener, who sits on Stillhouse’s board as a representative of Quadrant.
Launched in 2016, Stillhouse offers a line of whiskey, black bourbon and other spirits. The company’s newest product, Classic Vodka, was announced in a splashy story on People.com earlier this month, though Beckerman now alleges that the product’s launch has been jeopardized by Bacardi’s actions.
Bacardi sent the following statement to Billboard in response to the lawsuit: “Bacardi is an entrepreneurial company with a proven track record of working with new and emerging brands to grow them into household names. 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 jeopardize 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.”
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