Latest News 2013 January Changes in North Texas Liquor Laws and Additional Competition Blamed for Liquor Chain Store Bankruptcy

Changes in North Texas Liquor Laws and Additional Competition Blamed for Liquor Chain Store Bankruptcy

Changes in the North Texas wet laws, which added competition in the liquor store market, has been blamed for the recent bankruptcy filing of the Centennial Beverage Group, according to the Star Telegram.

A recent "inventory liquidation" warehouse sale was allegedly planned to avoid a shut down. The company expected to earn $2.3 million in sales and allegedly was able to earn $2.7 million.

According to the company's attorney, the Chapter 11 filing was made in the U.S. Bankruptcy Court in Dallas. There is a reported $10 million owed to lenders and creditors. BBVA Compass Bank is the company's largest lender and creditors include liquor and wine distributors Glazer's and Republic.

According to attorney Robert D. Albergotti, some retail stores will remain open while a few others will close. The company will restructure without debtor-in-possession borrowing, as there is still a adequate cash flow.

The exact listing of the stores to be shuttered have yet to be disclosed.

In 2011 Centennial expanded by acquiring Majestic stores – as the latter was in bankruptcy – and speculation grew that Centennial was growing to rapidly to cover ensuing debt.

Albergotti told reporters, "Centennial is in pretty good shape for a company going into bankruptcy. We don't need any financing. We have adequate cash on hand and forecasting sufficient cash flow."

Jim Vandeveer, followed by his daughter, ran the chain store for nearly 76 years prior to selling the company to the VEI Miller Acquisition ll LLC investment group in March of 2010. The group's leader, Doug Miller, is the chairman and CEO of the Dallas oil and gas company, Exco Resources.

Prior to the sale, in 2000 Vandeveer acquired the liquor store chain Big Daddy.

According to the bankruptcy filing, Centennial president and CEO, Gregory Wonsmos, said that due to the changes in North Texas dry laws – allowing supermarkets to now sell wine and alcohol – had diminished the chain store business. Along with supermarkets, the new laws allowed for the onslaught of larger stores, such as Specs, Total Wine and Goody Goody's, to open up for business.

The filing said, "As a result of this pressure, sales have declined -- and are currently down approximately 50 percent year over year."

In the summer of 2012 Centennial closed some of its stores and divisions. With only 23 stores remaining, more than half of the work force was reduced.

However, the closing of the stores did little to lessen the debt to the company's liquor and wine wholesalers. Beer distributors, which only deliver if paid in cash, are not listed as creditors in the bankruptcy.

The filing lists $6 million in loans, and more in real estate, is owed to BBVA Compass, $9.5 million to investor Doug Miller, $3.4 million to Republic Beverage, $2.6 million to the employee pension fund and $1.8 million to Glazer's Wholesale.

Growing debt in a competitive market is one reason for filing a bankruptcy. If you are considering a business or personal bankruptcy, contact a bankruptcy attorney to serve your needs best.