The Official Committee of Unsecured Creditors of Gabriel Investment Group, Inc. and its affiliates asked the U.S. Bankruptcy Court for the Western District of Texas to terminate the exclusivity periods for the Debtors to file and solicit acceptances for their Chapter 11 plan.
The Committee recently joined PNC’s motion seeking appointment of a trustee due to the Debtors’ failure to consummate a sale of their assets and for wasting the estate close to the point of insolvency.
From the outset, PNC has pushed the Debtors for a plan to resolve these cases before it is too late. But the Debtors have been slow to act. Despite the fact that it was clear from the beginning that a transaction (capital raise or sale) would have to occur for the Debtors to have any hope of continued existence, the Debtors delayed hiring an investment banking firm.
Once the Debtor retained Riverbend as its investment banking firm, Riverbend has diligently marketed the Debtors’ assets and was able to locate at least one potential buyer who offered $7 million for the Debtors’ assets, plus a potential sharing arrangement related to the future monetization of liquor license exemptions.
However, by mid-February 2020, the Debtors filed two “placeholder” plans that completely ignored the ongoing sale process. The plans effectively split the company into an operating entity and a license entity. The operating entity would be owned by a family friend that would continue to employ the Gabriels at their inflated salaries, while the licensing entity pursued its quixotic litigation against the TABC.
The Committee asserts that the Plans filed by the Debtors are not confirmable because they violate the absolute priority rule and they are not feasible. Additionally, the Debtors have constantly made agreements with their creditors related to selling their assets and violated those agreements. At this point in time, to the Committee’s knowledge, no creditors support Debtors’ plans.
Since the Debtors made it abundantly clear that they do not actually want to consummate a sale, the Committee warns that giving the Debtors any additional time to try and solicit a plan that is not confirmable will likely lead to an insolvent estate that will result in total losses to the unsecured creditors.
About Gabriel Investment Group
Gabriel Investment Group, Inc., founded in 1948, operates a chain of package stores that sell wines, liquors, and beers. As of the petition date, Gabriel operates 15 package store locations as Gabriel’s Liquor and 30 package store locations as Don’s & Ben’s Liquor.
Gabriel Investment Group sought relief under Chapter 11 of the Bankruptcy Code (Bank. W.D. Tex. Lead Case No. 19-52298) on Sept. 27, 2019 in San Antonio Texas. The other debtor affiliates are: Don’s & Ben’s Inc. (Bankr. W.D. Tex. 19-52299); Gabriel Holdings, LLC (Bankr. W.D. Tex. 19-52300); SA Discount Liquors, Inc. (Bankr. W.D. Tex. 19-52301); and Gabriel GP, Inc. (Bankr. W.D. Tex. 19-52302). In the petitions signed by Inez Cindy Gabriel, president, the Debtors were estimated to have assets at $1 million to $10 million and liabilities within the same range.
Judge Ronald B. King oversees the cases.
The Debtors tapped Pulman Cappuccio & Pullen, LLP as legal counsel.
The Office of the U.S. Trustee appointed creditors to serve on the official committee of unsecured creditors on Nov. 21, 2019. The committee is represented by Muller Smeberg, PLLC.