Sheehan Family Strikes Deal to ‘Consolidate Ownership’ and End Lawsuit

The three-year legal battle between Sheehan family members appears to be coming to a resolution as a deal to “consolidate ownership” of the multi-state distributor under four of Gerald “Jerry” Sheehan’s sons has been reached.

A joint filing in the Superior Court of Massachusetts’ Suffolk County last week indicated that the Sheehan family had reached an “Equity Interest Purchase Agreement” (EIPA) that will settle the litigation upon the closing of the sale of the business.

In a statement shared with Brewbound, Sheehan Family Companies confirmed that a sale process was underway that would see Timothy, John, Christopher and Matthew Sheehan acquire the business from “other Sheehan family members, who do not wish to continue in the business.”

“This agreement will ensure that one of the premier beverage distributors in the country remains a family-owned enterprise,” the company said.

The transaction is expected to close in Q2 2024, although the company noted “a number of conditions still must be met to complete the agreement.” Family patriarch Jerry Sheehan is expected to retire once the deal is done.

“The Sheehan Family Companies have moved to consolidate ownership in a subset of the current shareholder group in order to ensure an orderly succession for the company that the family built over six decades from a local beer distributor based in Kingston, Massachusetts, into a large multi-state operation,” the company said.

Beer Marketer’s Insights, which first reported the news, said operations in Massachusetts (Craft Massachusetts, Seaboard Products, L. Knife & Son), New York (Craft New York, Union Beer, Tri-Valley Beverage, TJ Sheehan Distributing), Wisconsin (Beechwood Sales & Service) and Virginia (Specialty Beverage) are included in the transaction. Craft Connecticut and Beer House of Kentucky are carved out of the deal.

The lawsuit – filed on December 21, 2020, by Tim Sheehan and George L. Cushing, a trustee representing trusts for Tim and his brother John Sheehan (who is not personally a plaintiff in the case) – alleged that Jerry and Maureen, the patriarch and matriarch of the Sheehan family, misappropriated company funds and violated their fiduciary duties.

In the original complaint, Cushing and Tim Sheehan alleged that the Sheehan parents attempted to “level the stacks” of compensation among the siblings who took active roles working for the family business and those who opted out.

Should the sale close, the lawsuit would be dismissed with prejudice. Negotiations have been underway since last May, when an order staying the proceedings was first entered.

According to the court filing, the Sheehan family members worked for several months toward finalizing the EIPA, which was described as “a highly complex set of business transactions which, if closed, will result in settlement of the litigation.”

“The negotiations involved multiple parties to the anticipated transactions, and their counsel, negotiating numerous financial, operational and business issues that needed to be resolved relating to transferring ownership and operations over several companies in three different states,” the filing reads. “The EIPA has now been finalized and executed by the parties. To give a sense of the complexity of the anticipated transactions, the EIPA is over 115 pages long, with 13 schedules and 5 exhibits.”

In the years since the lawsuit was first filed, the company has offloaded several of its distribution branches, including Craft Vermont; Hunterdon in New Jersey; Legends Distributing in Maryland and Washington, D.C.; Craft New Hampshire; Craft Rhode Island; Craft Maine; and its St. Killian Importing portfolio.

Calls to attorneys for both parties were not returned as of press time.