A distillery and bar in Cary known for its unique spirit options has permanently closed after co-owners locked horns in years-long legal battles.

Spirit Water, located at 3300 Three Oaks Road, officially closed Nov. 30, Cary Village Administrator Erik Morimoto said. The distillery, which opened in 2019, was co-owned by Tim Kovac, who found fame and success as the founder of Not Your Father’s brand of drinks and Small Town Brewery.

Kovac and co-owner Jagdish Chevli moved their business to Cary after closing Small Town Brewery in Wauconda. The two have been in business together for years after Chevli bought half of the ownership of Small Town Brewery in 2018, according to court documents; the agreement was for Chevli to handle finances while Kovac would handle operations.

But things went sour for the business partners when Kovac fired Chevli in 2023, according to court records, and that was followed by lawsuits and countersuits filed in McHenry County court.

Kovac’s lawsuit filed last year accuses Chevli of financial misstatements, “sabotaging” the company’s email server and squandering “lucrative business opportunities,” according to court documents.

According to the lawsuit, Chevli, unbeknownst to Kovac, bought the Spirit Water building for $800,000 in 2019 under his own company called Tridev and started charging Small Town Brewery monthly rent. Kovac indicated in court filings that he was under the impression that Chevli bought the building under their Small Town Brewery business.

In 2023, the two owners started to argue over what Kovac claimed was Chevli’s “mismanagement,” and Kovac hired an outside accounting firm to look into finances, according to court documents. The lawsuit claims that Chevli “secretly diverted” more than $1.4 million to his own companies that included “secret rents,” “double” the salary to himself, almost $230,000 in unauthorized credit card purchases and other payments directed to himself.

Kovac formally fired Chevli in February 2023, according to court documents.

“Manipulating our emails and not signing our contract with Miller has cost us millions of dollars,” Kovac said in a termination letter to Chevli in 2023, included in court filings.

A hearing is scheduled in February, according to court records.

The lawsuit came days after Chevli filed his first eviction lawsuit against Kovac last year, claiming that Kovac failed to pay rent. The court ultimately sided with Kovac that the lease was not valid or enforceable.

Chevli filed another eviction lawsuit against Kovac earlier this year that went to trial. Court documents show that Chevli terminated the lease after Kovac stopped making rent payments starting in March 2023.

The lawsuit argued that Kovac owes $126,600 in past due rent. Court documents show that Chevli sent Kovac a rent termination letter in December 2024, giving him a 30-day notice to vacate.

Attorneys representing Chevli declined to comment, citing the pending nature of the legal actions.

But Kovac’s attorney, Andrew Papke, said it wasn’t until Chevli was fired that the property lease was mentioned. Papke argued that no quarterly financial reports were made when Chevli was a business partner, the rent was overpriced by double the market value, and there was “intentional misrepresentation by omission.”

In a court document, Papke said that Chevli withheld information from Kovac and that “here, silence was persistent, deliberate and devastating.”

Papke said in his closing argument: “The evidence shows no lease was negotiated, signed or disclosed. The document is a sham, produced only after years of delay and under suspicious circumstances.”

Ultimately, Judge Suzanne Mangiamele ordered Kovac in November to pay $156,200 plus about $400 in attorney fees to Chevli, records show; the court gave Kovac until the end of May to move out of the building.

Chevli has further requested Kovac to pay an additional $18,300 in attorney fees.