If you’ve had a glass of scotch or a bourbon cocktail in Dallas in the last few years, chances are pretty good that you’ve made a purchase at a Centennial. The only problem for Centennial Beverage Group, however, is that you just haven’t been making as many purchases as they need to keep their doors open.
Facing a sharp decline in sales in recent months as well as unavoidable fixed costs, most notably debt service, the Dallas-based liquor store chain filed for Chapter 11 bankruptcy protection in late 2012. Preceding the bankruptcy filing, Centennial engaged in a one-time “inventory liquidation” in hopes of raising the necessary funds to survive bankruptcy without interim debtor financing. The strategy – which raised $2.7 million, $400,000 more than forecasted – appears to have worked.
So, what put Centennial in a position where it had to engage in an asset fire sale and file for Chapter 11 protection? The reasons are many, but imprudent overexpansion, excessive reliance on credit, and unexpected competition from “big box” liquor stores all seem to play a part.
The trials and tribulations of this Dallas landmark company aren’t just important for corporate debtors. Consumer debtors should pay attention, too. Just what are the lessons worth learning?
First, if you’re thinking about declaring bankruptcy, you should have a plan in place. Centennial’s “inventory liquidation” was a measure which its creditors probably didn’t see coming. As a result, Centennial successfully dodged one of the critical periods during the life of a bankruptcy: how to keep the wheels turning before the discharge of debts.
Second, imprudent overexpansion, excessive reliance on credit, and unexpected competition are precisely the same drivers in most consumer bankruptcies, too. If you purchase more than you can afford, you’ve probably overexpanded. If you’re making normal operating expense purchases on credit cards (i.e. groceries or gas), you’re probably relying too much on credit. And if you’ve lost a job or if you’re having trouble finding a job, labor competition may be the source of your problem.
Fortunately for Centennial Beverage Group, skilled, experienced attorneys were available to help firm management size-up their challenges and to chart a course for the future. The professionals at Fears Nachawati are prepared to do the same for you. To find out how we can help you and your family, contact our lawyers and professionals today.