Liquor licenses have become a hot topic in San Diego bankruptcy cases. Many people mistakenly believe that their liquor license is somehow immune from being taken away in bankruptcy cases because it is essential to their livelihood, the running of their business. In fact, alcoholic beverage licenses can be, and usually are, treated just like any other asset when you file bankruptcy in San Diego. That means that if your lawyer files your bankruptcy without a proper assessment of the effect of a liquor license, the trustee could potentially take control of the liquor license and sell it to generate money to pay your creditors.
Because of the possibility of losing your liquor license, bankruptcy may not always be your best debt relief option if you own a bar or restaurant business and have a full license. You need to discuss your options with a lawyer who has experience dealing with alcoholic beverage licenses and knows the San Diego trustees stances on such licenses. Depending upon which Chapter you file under, Chapter 7 vs. 13, your options may differ with respect to keeping a liquor license when you file bankruptcy San Diego.
In a Chapter 7 bankruptcy, the trustee could exercise control over a liquor license, sell it on the open market, give you the share of proceeds that is protected by your applicable exemptions (the amount of assets that you can keep when you file bankruptcy), and distribute the rest of the proceeds to your unsecured creditors. In fact, if you have a full liquor license, this is likely. Unless you are able to pay the trustee money to keep your license, called buying back your nonexempt equity (you can discuss this with your lawyer), you could risk losing your license.
In a Chapter 13 bankruptcy, the San Diego trustees will usually require you to pay to your unsecured creditors, through your Chapter 13 repayment plan, the amount of the nonexempt equity in your liquor license. If you have a beer and wine license, this is usually a nonissue. If you have a full liquor license, this can be a big issue, due to the significant value of this type of a license.
It is possible that the trustee won't be interested in your alcoholic beverage license, for example, if it is in the name of a corporation whose liabilities exceed its assets, or for other reasons. This is another factor that your attorney will consider when evaluating your options.
With proper guidance from a San Diego bankruptcy lawyer, you may be able to file bankruptcy and keep your liquor license. After careful consideration of many variables, an experienced attorney can properly advise you as to how your license will be treated when you file a Chapter 7 or Chapter 13 case, that is, whether you will be able to keep your license, while is critical to your livelihood, when you file for bankruptcy protection.