Founding Partner Robert Lewis Quoted in Restaurant Hospitality Article “Operators Find Relief for Liquor License Payments During the Coronavirus Pandemic”

Operators find relief for liquor license payments during the coronavirus pandemic

States suspend fees, buy back unsold booze to help struggling bar/restaurant operators with liquor licenses during COVID-19.

Mark Hamstra | Apr 22, 2020

For many independent restaurant operators that sell alcohol, the time spent during the lockdown has not been a happy hour, especially for those who continue to make payments to maintain their liquor licenses despite a lack of revenues.

In many areas of the country, liquor licenses are bought and sold on an open market and can cost hundreds of thousands of dollars. These licenses are often purchased with loans that require steep monthly payments.

Caridad Herera, owner of Café 293 In Homestead, Fla., had been paying her lenders $2,600 per month for her liquor license since last July, even though her business only opened in January of this year and closed in March due to the coronavirus pandemic.

“Business was booming,” she said. “Every week better than the week before, then all of a sudden I had to close after I spent a whole year building the business, not making one dollar.”

Even after she closed, Herera continued to pay employees for the first week into the shutdown — “They had kids; they needed groceries,” she said — but she needed assistance with her other monthly obligations.

Herera turned to Miami-based Spiritus Law, which specializes in representing businesses in alcohol-related industries, which was able to negotiate a forbearance on the loan so that Herera will not have to resume payments until the crisis has passed.

“The sudden loss of income makes it just impossible for many businesses to make their standard monthly payments,” said Rob Lewis of Spiritus Law.

He suggested that operators in a similar situation contact their lenders first to see if they can negotiate new terms, and seek legal counsel to review loan documents. Some operators may have recourse to obtain a forbearance on loan payments as a result of the pandemic.

Meanwhile Herera said she also applied for a loan through the federal government’s Paycheck Protection Program on the first day it became available, but she did not hear back, other than to confirm that her application had been received.

The program ran out of funding last week, but a bill that would inject another $310 billion into the program was passed by the Senate on Tuesday and is scheduled for a House vote Wednesday, and the President has indicated his support.

Herera said she’s unsure yet when she’ll be able to reopen.

“As soon as they say I can, within 30 minutes I am going to kick the door wide open,” she said.

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David Madison / Stone

 

Some local relief

Though restrictions on restaurants are likely to be gradually lifted in coming weeks in some states, bars are likely to remain shuttered for a longer period.

Across the country, some local governments have sought to give relief to liquor license owners in various ways. Some have opened up off-premises alcohol sales to allow restaurant operators to sell alcohol to go, and others have suspended collection of the fees operators pay to maintain their licenses to sell alcohol.

Other states have sought creative ways to help small bars and restaurants survive the crisis.

In Michigan, for example, Gov. Gretchen Whitmer issued an executive order authorizing the state Liquor Control Commission to “buy back” unsold beer, wine and liquor from operators in exchange for cash at the full cost that operators paid for the booze.

More commonly, states and municipalities are offering operators the opportunity to delay payments of fees. In Arizona, Gov. Doug Ducey in late March said collection of liquor license fees would be suspended for 90 days effective April 1.

Similarly, Virginia Gov. Ralph Northam recently authorized the state Alcoholic Beverage Control Authority to issue a similar deferment of liquor license payments.

Still, more needs to be done to help the industry, said Robert Melvin, director of government affairs at the Virginia Restaurant, Lodging & Travel Association.

Melvin said the association has met with state administrators about the possibility of creating a COVID relief fund for small businesses, such as those created in Maryland; Washington D.C.; Illinois and other areas.

“Unfortunately, the federal relief has not been enough, and we certainly need more assistance for our restaurants in this state in order to help them out through this challenging time,” he said.

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About Spiritus Law:
Spiritus Law is an entrepreneurial law firm focused on business regulatory licensing, trade practice compliance and business conflict resolution for highly regulated industries dealing in alcohol production and distribution, hospitality services, commercial development and international business transactions. The Firm is founded on traditional principles of client counseling and teamwork with a cutting-edge twist on regulatory innovation and modern problem-solving. We focus on the business needs of individual clients and leading industry members so we can advance business objectives and influence regulatory changes that guide our clients’ business operations. Spiritus Law combines a unique blend of professionals, including attorneys, government consultants, licensing assistants and paralegals to assist its diverse clients. We leverage our unparalleled experience working with government agencies and judicial courts on the federal, state and local level to develop compliance business operation strategies and resolve business conflicts and disputes. Our modern approach to transparent client representation and employee engagement defines our collaborative spirit and progressive energy.

Core Services:
Primary service areas include Alcohol Licensing & Regulatory Compliance, Alcohol Production & Distribution Transactions, Commercial Litigation & Business Disputes, Hospitality Regulatory Compliance & Permitting, Commercial Development and Administrative Enforcement Defense with special life management services for law enforcement and first responders. The Alcohol Industry Group focuses on providing complete food and alcohol licensing and regulatory services in the development of licensing structures and business operational guidelines for the manufacturing, importation, purchase and retail sale and service of alcoholic beverages. Our firm services an array of industries, including alcohol producers, sports teams, hotels, theme parks, movie theaters, grocery stores, liquor stores, bars, commercial developers and more.

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