Centennial Liquor Bankruptcy Update | Store Sale to Cheers Spirits | February 1, 2013
[image_frame style=”framed” align=”right” alt=”Centennial | Cheers Sale Bankruptcy – business bankruptcy attorney”]http://chapter11dallas.com/wp-content/uploads/2012/12/Centennial-Liquor.jpg[/image_frame]Earlier, we reported that Centennial Beverage Group LLC, a chain of 23 liquor stores in Texas, filed a petition for Chapter 11 reorganization on Dec. 17 in Dallas. The Bankruptcy Court has approved the sale of 12 of the company’s stores to Cheers Spirits which are expected to open in February, 2013.
According to Court pleadings, Centennial is Dallas-Fort Worth’s leading retailer of spirits, wine, and beer. According to Centennial, the company’s profitability has declined in the face of recent difficulties relating to increased competition from “Big-box” retailers as well as changes in local alcohol laws that have expanded the ability of grocery stores and other retailers to sell beer and wine. To address these difficulties, prior to the Petition Date the Debtor closed multiple underperforming locations, and began marketing a number of its other store locations for sale, sub-lease, or other assignment. In furtherance of these marketing efforts, Centennial hired Hank Dickerson & Company to act as broker for any transactions with Cheers Spirits and Liquor, LLC (“Cheers”), PCK Management Group, or any of their affiliates or ownership. Pursuant to this agreement, Hank Dickerson & Company will receive – subject to Court approval – a $25,000 commission per store upon the successful assignment of each location.
The proposed purchase price for each of the locations (including the related FF&E) is $50,000.00. The Cheers PSA contemplates an assumption and assignment of the leases held by Centennial on 11 of the 13 stores, effective as of the issuance of the license to Cheers from the Texas Alcohol Beverage Commission (the “TABC”) to operate each store. Cheers will pay January 2013 rent on these locations. Centennial will remain in those locations in which it currently is conducting operations and will continue ongoing sales efforts during the interim period between the entry of an order approving this Motion and Cheers’ receipt of the TABC license for a given property. Upon issuance of the license for each property, Cheers will receive a credit on the purchase price representing the pro-rata portion of January (and, to the extent necessary, future months) rent paid by Cheers during the period prior to issuance of the license. Such credit shall not exceed the $50,000 purchase price, in each instance.
The remaining two locations are owned by JWV Associates, LP, a partnership in which Centennial holds a 99% limited partnership interest. The Cheers PSA contemplates that Cheers will enter into a lease with JWV Associates, LP for these two locations, effective upon the issuance of a TABC license for each store. Centennial will remain in those locations in which it is currently conducting operations and will continue ongoing sales efforts during the interim period between the entry of an order approving this Motion and Cheers’ receipt of the TABC license for a given property. As with the 11 leased stores discussed above, Cheers will pay January (and to the extent necessary, future months) rent, and will receive a credit on the purchase price for the pro-rated period prior to the issuance of the license for that location. Such credit shall not exceed the $50,000 purchase price, in each instance.
Eight of the 13 stores included in the Asset Sale were closed by the Debtor prior to the Petition Date.
Upon the Motion of Centennial, Chief Judge Barbara J. Houser approved the company’s sale of 12 store locations to Cheers by Order dated January 19, 2013. According the Cheers owner Peter “Woody” Kern, it is expected that the stores will be reopened as Cheers stores in early February 2013 upon TABC approval.
- Click here to find out how Centennial and Cheers received Bankruptcy Court authority to sell assets free and clear of liens, claims and encumbrances to Cheers.
- Click here to find out how Cheers received such a bargain.
- Find out more about the Chapter 11 Process