Majestic Liquor files Chapter 11 bankruptcy - KCBD NewsChannel 11 Lubbock

6/8/10

Majestic Liquor files Chapter 11 bankruptcy

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By Ann Wyatt Little - bio | email

LUBBOCK, TX (KCBD) – The May alcohol election and the downturn in the economy are two reasons Majestic Liquor Stores blame for poor profits in five of their retail shops at the strip. 

The Dallas based company filed a Chapter 11 Bankruptcy petition in a Fort Worth courtroom over the weekend in hopes of restructuring its debt. One store owner on the strip says he has slowly watched the area turn into a ghost town.

Next to its business in the Metroplex, Lubbock is its second largest customer. Some of Majestic's stores include Doc's, which still has a main office at the strip, Crossed Keys and the Cellar where the doors are shut.

"We are just a small little store," says Jerry ‘Hoot' Thomas who owns Hoot's Liquor Store on the lower end of the strip. Thomas put a new sign out in front of his store. "Welcome Doubt T customers. After they closed they needed somewhere to shop and I'm the next store on the road," he says.

Thomas says the first to close on the strip was Cross Keys and slowly after that doors shut like dominoes. After Lubbock voters overwhelmingly cast ballots in favor of alcohol sales county wide, Jerry watched the lights on the strip dim. "It's kind of strange to drive by and there are no cars and weeds growing up in the parking lots," adds Thomas about the empty buildings.

"I know they say the strip was a monopoly but there were a lot of little mom and pops and we are still open. It's the big people that come in here and bought the stores that got too big too quick," says Thomas.

Five of Hoot's competitors are owned by Dallas based Majestic Liquor Stores, Inc. In a Chapter 11 petition filed the company points to the 2009 alcohol election and the down economy as reasons their strip shops are no longer profitable.

When alcohol hit store shelves last August, Hoot's profits dropped 40 to 50 percent. "I didn't lose all my customers. I still have a pretty good head count coming in," says Thomas.

Thomas says with a little honest advertising his little shop on the lower end of the strip will stay right where it is. "It says 'stop I need your money' and that is just the truth," he says.

Majestic released a statement on the issue:

DALLAS (June 7, 2010)—Majestic announced that it is voluntarily seeking relief to restructure its debts under chapter 11 of the United States Bankruptcy Code. On June 6, 2010, Majestic filed its chapter 11 case in the United States Bankruptcy Court for the Northern District of Texas and expects to proceed expediently through the proceedings toward a significantly improved balance sheet. Majestic intends to work with its constituencies to continue its business operations and emerge from bankruptcy with a plan of reorganization that preserves Majestic's profitable Texas-based operations.

Majestic announced that earlier today it received approval of certain of its "first-day" motions at a hearing before the Honorable Judge Russell Nelms, United States Bankruptcy Judge for the Northern District of Texas. Majestic's requests included the authorization to maintain its agreement to process credit cards, pay prepetition wages owed to employees, and pay its largest liquor suppliers as well as certain suppliers of tobacco, food, soda, ice and paper products. The approval of these "first-day" motions allows Majestic to preserve its current value and maintain customer satisfaction as it continues to operate the business as a debtor in possession.

According to Majestic attorneys, Bobby Forshey and Jeff Prostok of Forshey & Prostok, LLP, the remainder of the "first-day" motions will be heard tomorrow and will include the authorization to maintain its case management system, the honoring of gift certificates and honoring its employee benefit obligations.

Debtors include: Majestic Liquor Stores, Inc.; Majestic Texas-Grapevine, L.P.; Majestic Texas Properties, L.P.; Majestic GP, LLC; Majestic GP II, LLC.

Majestic was incorporated in Texas in 1955 and has posted yearly gross sales in excess of $150 million. Majestic currently operates over forty-five retail stores, including several establishments in the Dallas-Fort Worth area. Majestic employs approximately 400 people.

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