B.C. pub chain the Donnelly Group seeks creditor protection

Bert Hick, a liquor and cannabis licensing expert who heads Rising Tide Consultants, said he is “saddened” by the news and fears for the whole hospitality industry.

A lot of it was COVID,” said Hick, but it’s also labour shortages, rising costs and the looming payback of pandemic financial supports from the federal government.

It’s a bit of a perfect storm,” said Hick. “The hospitality industry is very, very fragile right now. My prediction is you’re going to hear more horror stories in the coming months” with the COVID relief payments coming due at the end of the year.

The Donnelly Group, which owns pubs and clubs that are fixtures in Vancouver’s nightlife and hospitality industry, is filing for creditor protection.

The Vancouver-based company, which operates more than a dozen pubs, clubs and restaurants in Vancouver and Toronto under the Freehouse Collective, said Wednesday it has started proceedings under the Companies’ Creditors Arrangement Act (CCAA) to revise the terms of existing loans and restructure debt it needed to take on to survive COVID-19.

The Donnelly Group has opted to initiate the creditor protection process to restructure to avoid closing locations and laying off employees, said company founder and CEO Jeff Donnelly.

“We could have gone one of two directions. We could have, frankly, just closed a bunch of our businesses and just stuck with the real winners, and we would have been OK,” Donnelly said Wednesday. “But we might have lost half of our workforce. And when you’ve got 800 employees, that just wasn’t an option for us.

“This is what we need to do to keep these places open, so we’re going to do it,” Donnelly said. “We’re going to come out stronger than we were before.”

In a petition filed in B.C. Supreme Court on Tuesday, the company asked the court to appoint Ernst & Young as a monitor over its affairs as it works out a restructuring plan with its creditors.

The petition involves 12 pubs, cocktail clubs and restaurants in Vancouver — including the Lamplighter, Butcher & Bullock, and Brass Fish — and two in Toronto, as well as three Barber & Co barbershops, Bomber Brewing in East Vancouver, and a company that handles the cleaning of the hospitality venues.

In total, 750 people are employed in Freehouse’s hospitality venues, 40 at Bomber Brewing, and 25 at Barber & Co.

A retail cannabis business also owned by Donnelly, called Lightbox and doing business as Dutch Love, is subject to separate insolvency proceedings, after applying for creditor protection late last year.

The company said the move was necessary to survive the crippling economic impact wrought by the pandemic on the hospitality industry.

It will work on a restructuring plan and streamline operations in the next couple months as part of the proceedings, but expects to continue operations at its locations and “engage its employees at current levels during the CCAA proceeding and afterwards.”

The company said its decision to restructure isn’t a reflection of its employees but a “strategic response to the industry-wide impact of the COVID-19 pandemic.”

B.C. Restaurant and Foodservices Association head Ian Tostenson said Donnelly’s entrepreneurship and vision were worthy of him being named to the B.C. Restaurant Hall of Fame pre-pandemic, but the expansion into barber shops, cannabis and brewing proved costly with the COVID downturn.

“It was working then in that economy,” said Tostenson. “You could fuel that kind of machine, that kind of business then.”

He noted the whole industry got hit hard, acting as “a bit of a canary in the coal mine” for retail generally because of closures, capacity limits and other challenges.

Then, when customers started coming back, inflation hit along with supply chain challenges, increasing labour costs and a shortage of workers.

“We’re seeing bankruptcies up 116 per cent year-over- year,” said Tostenson, and less than 50 per cent of all restaurants in a recent survey were making money.

Bert Hick, a liquor and cannabis licensing expert who heads Rising Tide Consultants, said he is “saddened” by the news and fears for the whole hospitality industry.

“A lot of it was COVID,” said Hick, but it’s also labour shortages, rising costs and the looming payback of pandemic financial supports from the federal government.

“It’s a bit of a perfect storm,” said Hick. “The hospitality industry is very, very fragile right now. My prediction is you’re going to hear more horror stories in the coming months” with the COVID relief payments coming due at the end of the year.

“A lot of business owners took those loans on the premise (business) would come back,” noted Tostenson. “And it did for a couple of months, but then inflation kicked in.”

Hick and Tostenson both praised the Donnelly Group as exemplary operators with an impeccable record in the industry.

Like most in the hospitality industry, the Donnelly Group’s businesses were shuttered in March 2020 as a result of the pandemic and reopened gradually in the following years.

According to Donnelly Group’s petition filed this week, the businesses were able to maintain payment of debts until 2021, when they negotiated an agreement with BMO, the primary lender, to make monthly interest-only payments.

Once venues reopened in 2022, the businesses faced further economic challenges due to hikes in the minimum wage, supply chain issues, and rising insurance and interest rates.

Revenues have returned to 2019 levels, increased labour and operational costs mean thinner margins and a lower profit, said the company.

The hospitality entities listed in the petition currently owe BMO about $13.6 million, while Bomber Brewing owes $1.25 million, according to the petition. Their monthly debt servicing payments total about $295,000 a month.

While the petitioners have been able to make interest-only payments to BMO following a 2021 agreement with the bank, they “are not in a position to make principal repayments on a go-forward basis,” said the petition.

BMO supports Donnelly’s restructuring, and the lender has agreed in principle to restructure the company’s payments during the process, the petition says: “BMO benefits by the continued operation of the enterprise by present management, which represents its best prospect of recovery.”

Donnelly is also in arrears with some landlords to the tune of about $766,000, is in arrears for PST, and faces lawsuits from landlords and other creditors.

https://vancouversun.com/news/local-news/b-c-pub-chain-donnelly-group-seeks-creditor-protection

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The Fast Way to Get Your Liquor License in BC

Recently, it seems all but impossible to buy a liquor store license in Vancouver, BC. In addition, moratoriums or prohibitions have been placed on nearly every significant type of liquor license in the area. To make these processes more manageable, here are the Top Guidelines When Buying Liquor License.

These restrictions have left prospective business owners trying to serve alcohol with a limited number of options legally.

Currently, the only licenses business owners can apply for are Liquor Primary and UBrew/UVin. Unfortunately, these restrictions limit the potential new business options to bars and nightclubs or homebrew enthusiast stores.

However, careful attention to detail highlights these licenses as options for new establishments.

There are a few expensive loopholes for would-be business owners in the region, and we’ll go into detail about those options. But, first, let’s examine the specific restrictions that have been placed on new retail establishments.

Limited Liquor License Options: Vancouver, BC Prohibitions 

Liquor store, owner choosing wine for business

Prohibitions are in place for new LRS (licensee retail stores) until July 1, 2022. So if your goal were to open a private liquor store that sells multiple types of alcohol (wine, spirits, beer, etc.), you’d have to wait until the above date.

However, the following businesses have an indefinite moratorium period, meaning currently, there’s no end in sight for the restrictions.

1. A Wine Store

Independent wine retailers, Vintners Quality Alliance, and tourism wine stores fall under wine stores. The only option available for merchants who want to open a wine store is to transition to an LRS license and wait until July to submit their application.

2. Specialty Wine Stores

Specialty wine stores have extensive wine selections like their regular wine store counterparts. The main difference is that specialty wine stores can also sell ciders, mead, and sake. These specialty wine stores are only located within grocery stores.

An indefinite moratorium exists for this type of license as well. Even in periods without restrictions, the rules placed on potential applicants rule out nearly all would-be merchants.

In addition, the store has to be 10,000 square feet, eliminating almost every type of grocer except big-box retailers.

Alternative Liquor License Options: Vancouver, BC Prohibitions

Business owner thinking of alternative liquor license options in Vancouver, BC

As we mentioned earlier on the first part of these top guidelines when buying a liquor license, it could be an expensive loophole to the prohibitions set forth by the Canadian government. So technically, these can be considered loopholes, but we’re not sure if we would consider them realistic loopholes.

Dormant SWS licenses are available to retailers through auctions hosted by the BC government. Unfortunately, we’re not entirely clear on what the term dormant license means. Regardless, you would think these auctions offered hope for BC retailers who otherwise had the door shut on their business options.

However, a starting bid of $125,000 hardly constitutes a glimmer of hope. It’s starting to seem like obtaining a liquor license in Vancouver, BC, is more challenging than winning the lottery.

These expensive auctions that give merchants the option to purchase an existing liquor license offer no real hope. Prohibitions are shutting the door even further on potential business owners.

However, this is only a part of the uphill battle retailers have to climb to open a new business and receive their license. So let’s forget about the prohibitions and license auctions for a moment.

When the restrictions for submitting applications were not in place, the process looked like for wannabe merchants to open a new establishment that served alcohol.

1.

First, you would need the approval of your local government even to attempt to navigate this complicated process. Once the government gives you the thumbs-up, you can move on to the following approval process.

Government approval for liquor licence in VCB

2.

The second step is petitioning the neighbours (surrounding businesses and residents) in an approval process that includes more feesBelieve it or not, you have to pay for the privilege to ask your neighbours to accept the idea of your potential business in the area.

Community support on liquor store

3.

Once your neighbours have given you their blessing, you must return to the government for final approval. First, they will review where your last address is for the business. During this step, they can decline your application if the company is too close to social or recreational establishments or too many companies in the area serve alcohol.

final government approval for liquor licence in VCB

It isn’t far-fetched to say that opening a new retail liquor establishment and obtaining your license is an impossible mission. But, unfortunately, the prohibitions make it impossible to run the application process’s gauntlet, and purchasing an existing license is not financially possible for most smaller merchants.

The only plausible option that exists for prospective business owners would be to buy an already established location. Purchasing a business gives you ownership of the traffic that frequents the area.

A license is already attached to that business. At least, choosing this option ensures you have established customers, and your money goes towards ownership and not a government auction.

Were these Top Guidelines When Buying Liquor License helpful? Let us know; we want to help you make your business come true.

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Ultimate Guide On How To Get Your Liquor License In BC

Getting your liquor license in BC is a comprehensive process. The licensing process for any liquor establishment requires outlining precise details that describe your intent as a merchant. 

Applicants must choose between an expansive list of different establishment categories and fulfill background check requirements. There is also an approval process that requires permission from the local government and a petition from residents around the intended business location. 

It sounds like a very time-consuming process to obtain a simple license. Without the proper preparation and guidance, it isn’t hard to let the process get away from you and become discouraging. However, with a few simple steps to prepare yourself, the process is easily simplified

If you’ve been thinking about obtaining a liquor license, you’ve come to the right place. We’ve got tips on the fast way to get your liquor license in BC.

Deciding What Type of License

Deciding what type of license

Before beginning the process, you need to have a clear picture of your business’s details. Deciding what type of license you want is crucial before going further into the process—knowing what license is critical to finding a fast way to get your liquor license in BC. 

  • A food-primary license is for restaurants and other businesses that serve food and have alcohol on the menu 
  • A liquor-primary license is a license for establishments like bars & nightclubs where an individual does not need to order food to purchase a drink. 
  • A manufacturer is any establishment that produces and bottles alcoholic beverages
  • An agent license is for a marketing representative who sells alcohol produced outside of BC
  • A catering license is for businesses that primarily serve food but without a central location.
    • They are primarily mobile and serve a variety of wine and cocktail drinks
  • Businesses that specialize in fans of homebrewing will need a UBrew/UVin license
  • Wine store licenses are reserved for establishments that specialize in a massive wine list. These locations will offer wine products exclusively
  • Specialty wine locations require a license that allows them to sell wine, sake, mead, and champagne inside of a retail grocery store space

Choosing the type of license you need and becoming familiar with the specified timeframe the license granting takes will prepare you for starting the process.

Have Everything Filled Out for a Fast Way to Get Your Liquor License In BC

This step sounds simple, but having everything organized is easier said than done. The different sets of paperwork combined with the steps involved can quickly become confusing 

Different paperwork is designated for each step, and it takes organization to ensure an efficient process. Of course, you can accomplish this organization on your own, but some services can assist in making the process smoother

Templates are available that outline every step of the application process. These templates outline everything in order and organize all the pertinent paperwork required for each step. Obtaining a template through the appropriate source is similar to having a certified assistant available to help keep you organized and on track. 

Prepare Beforehand

Supporting the community

Preparing before you get to specific steps can assist in the speed of the application process. For example, one of the steps includes petitioning residents and businesses in the area to allow you to become a merchant

In the months leading up to this step, familiarize yourself with the locals close to your desired business location. Inform them you plan on opening a business in the area and fill them in on the specifics. Let them know you’ll be petitioning for their approval on the business, and you’d like their support.

Assure the locals that by supporting you, they’ll receive your support in return. Make your presence known in local businesses in the months before starting the petition. This will show them you’re willing to support the community, and you’ll have a solid base of support when the time arrives to complete this step. 

For a Fast Way to Get Your Liquor License In BC, Consider Buying a Business

Considering buying a business

There is currently a moratorium on all new liquor license applications. The only exception to this is the liquor-primary license; this means your options are extremely limited. 

You can adjust to these restrictions by purchasing an already existing liquor license. The easiest way to accomplish this is by buying an already established business. This accomplishes several important tasks at once. 

When you purchase an already established business, you have a turn-key operation with a customer base. You’ll also eliminate the waiting process that comes with applying. 

Both of these steps involve a lot of time, and industry time is of the essence in the service. Therefore, if you’ve been considering opening any establishment that requires a liquor license, you should consider obtaining the license by purchasing an existing business. 

The existence of these restrictions makes it nearly impossible to open for business traditionally, and you have to leave your options open. Choosing this route may cost more, but the investment is paid back tenfold. The customer base you receive with an established business and the waiting that is eliminated by obtaining an approved license are both priceless. 

Looking to get a BC Liquor Licence? Schedule a free consultation with us.

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