Will Bankruptcy Cost You an ABC Permit in North Carolina?

 Posted on October 06, 2025 in Bankruptcy

If you are the owner of a North Carolina winery, brewery, restaurant, or bar, the cornerstone of your business could well be your permit to sell alcohol. If the economic downturn has affected your business, you may be facing bankruptcy and wondering whether you will be able to keep your alcohol permit. The North Carolina Alcoholic Beverage Control (ABC) Commission has strict rules about who can and cannot hold an alcohol permit, so a bankruptcy filing could raise a red flag.

This does not mean that you will automatically lose your alcohol permit, only that bankruptcy could trigger an investigation into the management, compliance, and overall financial situation of your business. You must understand how bankruptcy can potentially impact your business’s alcohol permit before you file. Consulting with an experienced Charlotte, NC small business bankruptcy attorney can help you determine the best way to get your finances back on track.  

How Important is an Alcohol Permit in NC Businesses?

Selling wine, beer, and mixed drinks at a business can significantly increase revenues, and alcohol cannot be sold without an alcohol permit. Operating without the correct permits can lead to significant legal consequences, and the permitting process involves strict regulatory oversight along with considerations of community impact and zoning. There are different types of permits, including retail, brewery, winery, distillery, catering, etc. An alcohol permit is considered an intangible business asset.

Filing for Chapter 11 Subchapter V Bankruptcy in North Carolina   

Many small businesses with alcohol permits will file for bankruptcy under Chapter 11, Subchapter V, which allows for the reorganization of debts while continuing business operations. This type of bankruptcy provides a fast, streamlined, and more affordable bankruptcy process. To file under Subchapter V, a business must meet specific federal criteria, including that the total liquidated, secured, and unsecured, non-contingent debt must not exceed $3,024,725.

At least 50 percent of your total debt must come from business or commercial activities, and the business must not be a single-asset real estate entity. The owner can retain ownership of the business, even when unsecured creditors are not paid in full, because the absolute priority rule of Chapter 11 does not apply. The process of Subchapter V reduces administrative costs by eliminating the requirement of an official creditors’ committee. A Subchapter V trustee will be appointed to facilitate and guide the reorganization plan.  

Will Subchapter V Bankruptcy Affect an Alcohol Permit?

A business filing for Subchapter V remains a "debtor-in-possession," which means it can continue to operate during the bankruptcy and will typically be allowed to retain its alcohol permit as an asset of the business. The North Carolina ABC Commission must be notified of the bankruptcy filing; the commission will review the filing and monitor the case. A solid reorganization plan that shows how the business will pay off its debts and become profitable will be viewed more favorably by the ABC.

The ABC Commission does have the right to revoke an alcohol permit or decline to renew a permit if poor management or significant financial instability becomes apparent during the bankruptcy. So, while alcohol permits do not automatically terminate in bankruptcy, the ABC Commission does require permit holders to remain "financially responsible." A bankruptcy filing can trigger scrutiny from the ABC Commission regarding compliance, control, and ownership.

Contact a Mecklenburg County, NC Small Business Bankruptcy Attorney

If financial issues are placing your business and alcohol permit at risk, you must act quickly to protect them. Bankruptcy can potentially save your business, but you must understand how the bankruptcy process intersects with ABC rules. A Charlotte, NC Subchapter V bankruptcy lawyer from Blossom Law PLLC can help ensure the best outcome for you and your business.

Attorney Blossom owned his own business before he became an attorney, so he recognizes how difficult it can be for a small business to obtain legal advice at a reasonable price. Call 704-256-7766 to schedule your free consultation.