Your liquor license can be seized to satisfy outstanding debts

In Hospitality by Richard Bianco

There are certain bills that a bar just has to pay on time. If you don’t pay purveyors or wholesalers you won’t have any food or drink to sell. But what about other, less vital accounts that you have? It’s easier to let those slide or get behind. If you do, the consequences can be severe.

Did you know that your license can be attached in a civil lawsuit, seized by the US Marshals Service, and sold to satisfy the debt?

Dirty Bar on Connecticut Avenue learned this the hard way on January 8, 2019, when the U.S. Marshals showed up at their door and snatched their license off the wall. See ABC Board Order No. 2019-040  The seizure was the result of an unpaid judgment against the bar from 2015.

Even a small judgment can have a major impact on a liquor license

A judgment creditor has a number of options to try and collect, many of them downright Draconian. The creditor can levy bank accounts or put a “till tap” in place, where the money comes right out of your cash register to pay the creditor. However, by far the most severe collection mechanism is the seizure and sale of your assets. This includes your liquor license, which is like the death penalty for your business.

The technical name for it is a “writ of fieri facias” which loosely translated from  Latin means “your screwed.” Here is how it works: After judgment a creditor requests writ. Then, the authorizing order is transmitted to the US Marshal’s office, the creditor fills out a form, which includes a description of the asset in question and where it is stored. After payment of the Marshal’s fee of a couple of hundred bucks, bam, two (2) armed and uniformed officers roll into the establishment and take the license off the wall. The creditor is then on his way to getting paid back, with the added bonus of public humiliation.

The Dirty Bar case ended like most, the establishment cut a deal to get the license back and continue operations. But, the creditor is not obligated to accept a payment arrangement. The license could be auctioned off to the highest bidder and the proceeds used to pay off the debt.

If your establishment is juggling creditors or trying to avoid the potential fieri facias death blow or if you are trying to collect from a licensed establishment, I’d be glad to meet and learn more about your case. Contact me or use the scheduling tool on my website to book an appointment for a free case evaluation.