Gabriel Invst v. Texas ABC

Case Type:
Case Status:
Reversed and Remanded
21-50322 (5th Circuit, Jan 28,2022) Published
The Fifth Circuit certified questions of Texas state law to the Texas Supreme Court regarding permissibility of alcohol permit transfer(s) as part of a proposed sale.
Procedural context:
Appeal from the United States District Court for the Western District of Texas, USDC No. 5:20-CV-1244, Xavier Rodriguez, U.S. District Judge. The District Court affirmed the Bankruptcy Court's decision.
The Chapter 11 debtor, a San Antonio liquor business, sued the Alcoholic Beverage Commission in an effort to obtain bankruptcy court approval to sell company shares to a non-exempt public company as part of a confirmed Chapter 11 plan.. Texas law requires a "package store permit" to sell alcohol at retail, and prohibits publicly traded corporations from obtaining such a permit, subject to certain limited exemptions, including a grandfather clause. The debtor qualified for the grandfather clause exemption. Specifically, the Fifth Circuit has asked the Texas Supreme Court to answer whether a package store’s permits remain valid if the store owners sell any or all of its shares to a public corporation that does not qualify under the exemption. And, if the answer is "yes," can the new owner continue to accumulate package store permits after the sale? The bankruptcy court and district court answered each question "no." Recognizing the larger potential economic ramifications of the legal determination on all alcohol sales, and that this is a question of first impression, the Court found that each of these three factors favored certification: 1. the closeness of the question and the existence of sufficient sources of state law; 2. the degree to which considerations of comity are relevant in light of the particular issue and case to be decided; and 3. practical limitations on the certification process: significant delay and possible inability to frame the issue so as to produce a helpful response on the part of the state court.
King, Costa, and Willett, Circuit Judges.

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