Dallas-Based Centennial Files For Bankruptcy, But Says It Will Stay In BusinessDecember 19, 2012
Under pressure from a wave of new competitors in the North Texas market, Dallas-based retailer Centennial Beverage has filed for Chapter 11 bankruptcy, saying it plans to downsize but stay in business. The company has over $10 million in debt and, because it’s on the Texas Alcoholic Beverage Commission’s “delinquent list,” has stopped receiving deliveries from wholesalers. Centennial has requested a “critical vendor program” to be allowed to make purchases from wholesalers during its bankruptcy proceedings. RNDC and Glazer’s are two of its biggest creditors, at $3.4 million and $1.8 million, respectively, according to court filings. Top Centennial investor Doug Miller, chairman and CEO of oil and gas group Exco, is owed $9.5 million.
Centennial president Greg Wonsmos said in court documents that the group has suffered from vastly increased competition in the North Texas area, including the recent entry of retail giants like Total Wine & More and Spec’s, as well as the advent of supermarket alcohol sales in formerly dry counties in the area that have recently voted to go wet. “As a result of this pressure,” the filing said, “sales have declined (and are currently down approximately 50% year over year).” In the 12 months through November the company had sales of $158 million. It currently holds $8.4 million in beer, wine and spirits inventory. Wonsmos didn’t immediately return a call seeking further comment this morning.
Centennial currently operates 23 stores across its Centennial, Majestic and Big Daddy’s brands—down from over 70 in early 2011, when it completed the acquisition of former competitor Majestic. More stores will now close, but how many remains to be seen. The group disclosed that it sold its East and West Texas operational divisions this summer, and now has 247 employees, down from 650. Those moves reduced debt by $35 million from January of this year to the present, the filing said. One landlord for a Centennial location told Shanken News Daily as far back as March that the company had ceased paying rent or property taxes, citing “a temporary cashflow problem.”
The group’s attorney, Robert Albergotti, told the Fort Worth Star-Telegram that an inventory liquidation sale last week netted $2.7 million, beating an expectation of $2.3 million, and that Centennial now has adequate cashflow to continue to operate. Still, competition in the retailer’s back yard figures only to intensify looking ahead, making a turnaround a tall order.