Bacardi Fires Back at Jay-Z’s Lawsuit Over Cognac Joint Venture

A Bacardi Ltd. subsidiary moved to join—and end—a lawsuit brought by Jay-Z over fears that the global liquor giant is intentionally tanking their cognac-making joint venture, D’Usse LLC, as part of a scheme to lower the price of a buyout the music mogul has demanded.

Empire Investments Inc., a wholly owned subsidiary of Bacardi International Ltd., sought to formally intervene in the dispute, which a Jay-Z affiliate initiated Oct. 17 with a sealed filing in Delaware’s Chancery Court. Although the Bacardi court papers are largely sealed, one publicly available filing indicated Empire has also moved to dismiss the case.

The suit, made public Oct. 21, seeks internal files from D’Usse in a bid to investigate allegations that Empire mismanaged the Cognac venture for years, only to begin deliberately running it into the ground after Jay-Z affiliate SCLiquor LLC exercised its option to be bought out.

The structure of the buyout rights “gave Bacardi a perverse incentive to mismanage D’Usse in the interim to artificially decrease its valuation for purposes of cashing out SC at an unfairly low price,” according to the complaint, which named only D’Usse as a defendant.

The suit seeks documents under a state law giving limited liability company investors broad inspection rights if they credibly suspect wrongdoing. Records cases often reflect an attempt to drum up fiduciary breach claims.

Bacardi didn’t respond to a request for comment when the case was unsealed Oct. 21. Empire’s sealed emergency motion to join the case was docketed Tuesday after being filed Oct. 24.

Empire is represented by Richards, Layton & Finger PA and Cravath, Swaine & Moore LLP. SCLiquors is represented by Young, Conaway, Stargatt & Taylor LLP and Gibson, Dunn & Crutcher LLP.

The case is SCLiquor LLC v. D’Usse LLC, Del. Ch., No. 2022-0931, 10/24/22.