Federal Court of Appeal Hears Arguments Regarding Sale of Shares by SA Liquor Company to Public Company



The legal battle of the new owners of a San Antonio liquor company to transfer its shares to a public company was submitted to a federal appeals court on Thursday.

Gabriel Investment Group has asked for a ruling from a three-judge panel of the U.S. 5th Circuit Appeals Tribunal in New Orleans that would allow the company to sell its shares to a public company. The Texas Alcoholic Beverage Commission opposed the request.

The state legislature in 1995 placed restrictions on permits for conditioning stores, which sell hard liquor. As a result, “public companies” cannot hold or possess a license in the state. A public company is defined as any company listed on the stock exchange or having more than 35 owners.

Gabriel Investment Group, or GIG, is considered a public company because it has more than 35 owners. However, the company was granted an exemption from the public ban before it came into force in 1995.

GIG maintains that the acquired rights exemption would be transferred to any public company that purchases its shares.

The Texas Alcoholic Beverage Commission says the exemption only applies to GIG itself.

The company is asking for a “court declaration that … the license would not be jeopardized by the acquisition of GIG by a non-exempt company,” Russell Post, a Houston attorney for GIG, told the three judges.

“If the reading you advocate is, as you say, straightforward, you would have been sitting on a pot of gold for 25 years – because this thing has enormous value, we all know if this thing works like you do. say yes, ”Judge Gregg Costa told Post.

But Costa added that it seemed inconsistent with Post’s position that for 25 years no one had made that “tens of millions of dollars, if not more, this thing would be worth in the market.”

Post replied that the current owners of GIG had invested in it based on the possibility of “using the grandfather clause”.

GIG, along with retailers Gabriel’s Liquor and Don’s & Ben’s Liquor, filed for Chapter 11 bankruptcy protection in September 2019, blaming competition from big box liquor stores.

The businesses had been operated by the politically linked Gabriel family for over 70 years.

During the Chapter 11 reorganization, GIG sued the Alcoholic Beverages Commission for the approval of a bankruptcy judge to sell shares of the company to a non-exempt public company, such as Walmart.

In the summer of 2020, GIG, Gabriel’s Liquor and Don’s & Ben’s became new owners as part of a reorganization plan. The bankrupt companies were combined into a single entity and then split into two.

Omega Capital Group, led by James Pfirrmann and Ron Heller, has taken over the operation of 32 Gabriel’s and Don’s & Ben’s stores in the region, along with the associated licenses and permits. The deal was valued at $ 6 million to $ 7 million.

The new owners of GIG – Blake-Wilder Companies of St. Petersburg, Fla., Omega and long-time shareholders – have received the assets and license for the Don’s & Ben’s store at 810 S. Gen. McMullen Drive. GIG also upheld the lawsuit against the TABC.

In October of last year, a bankruptcy judge ruled against GIG in the lawsuit. He appealed to federal court in San Antonio, but lost there in April.

A Blake-Wilder official told Express-News after losing the appeal he would take the case to the United States Supreme Court if necessary.

In Texas, any individual permit holder can have up to 250 parcel store permits. There are approximately 2,500 parcel stores in the state.

“A licensee could potentially own 10% of the parcel store business in Texas,” said Rance Craft, assistant attorney general in the state attorney general’s office, in his argument for the TABC. “So there are significant consequences for the sale of alcohol in Texas if GIG is right.”

If GIG is right, Craft said, it would mean that a state-owned company that has long been ineligible for grandfathering could nonetheless control the holder of a packaging store license.

“This is exactly what (the Texas Alcoholic Beverage Code) says it can’t happen,” Craft said. “It would be the odd result if reading GIG were to prevail.”

The judges did not say when they would render their decision.

[email protected]



Comments are closed.