RNDC Seeks Court Approval for $50 Million Joint Venture Sales in Bankruptcy
Bankrupt US distributor RNDC seeks court approval to sell joint venture stakes in Kentucky and Michigan for $50 million net, alongside a crucial $9 million settlement with Tito's maker.
American wine and spirits distribution giant Republic National Distributing Co. (RNDC), currently undergoing Chapter 11 bankruptcy restructuring, has filed an urgent motion with the U.S. Bankruptcy Court in Houston. The company is requesting authorization to consent to the sale of operations for two joint ventures in Kentucky and Michigan, a move expected to net the company approximately $50 million.
The filings were submitted under immense time pressure. According to the debtor-in-possession (DIP) financing agreement, RNDC is obligated to secure approval for a reorganization plan or close asset sales for the majority of its assets by October 29, 2026, when its credit facility expires. RNDC clarified to the court that to maintain minimum liquidity, the Kentucky transaction must close by the week ending October 30. A hearing on the matter has been scheduled for October 22.
Kentucky and Michigan Venture Sales
Under the proposed Kentucky deal, operations will be sold to KEG1 River City. The consideration for the distribution rights stands at approximately $50 million, alongside $43 million for real estate and $6 million for equipment. Out of this total, RNDC's share—holding a 68.75% stake in the venture—is expected to amount to roughly $30 million net.
Simultaneously, the Michigan sale—in which operations and assets will be transferred to three local distributors, including Great Lakes Wine & Spirits—is projected to net RNDC about $20 million for its 50% stake, with an additional $10 million potentially tied to the liabilities of the company's Indiana venture.
Settlement with Tito's Maker
A critical component of completing the Kentucky transaction rests on a settlement agreement signed with Fifth Generation, the producer of the mega-brands Tito's Handmade Vodka and Lalo Tequila. According to the arrangement reached after six weeks of negotiations, the vodka producer will pay RNDC $9 million in cash, in exchange for which both parties will drop mutual claims in two Washington arbitration proceedings where RNDC sought approximately $23.7 million in damages.
RNDC noted to the court that Fifth Generation's consent is vital to the success of the entire move: about $7.8 million of the Kentucky purchase price is attributed to the exclusive distribution rights for Tito's and Lalo brands, and the buyer has committed to purchasing existing inventory of these brands valued at approximately $1.4 million.
The company emphasized that had the manufacturer refused to appoint the buyer and transferred distribution rights elsewhere, RNDC would have lost over $6.3 million in net proceeds. In total, RNDC estimates the cumulative value of the settlement agreement and supplier support at approximately $18 million.
