Gabriel Holdings, which owns numerous local liquor stores, has filed for Chapter 11 bankruptcy protection. Credit: Stephanie Marquez / San Antonio Report

Gabriel Holdings, the longtime owner of several liquor store chains in San Antonio, has filed for bankruptcy and will close at least five of its stores in the coming weeks.

The family-owned Gabriel Investment Group, which operates Gabriel’s Liquors, Don’s & Ben’s, and Discount Liquor, appeared in bankruptcy court Tuesday to ask a judge for Chapter 11 protection while it reorganizes.

The filing blames the company’s financial troubles on increased competition from big-box retailers starting in 2013 and a failed merger attempt earlier this year.

Gabriel plans to close five of its 45 area stores this month and possibly five to 10 more in the coming months.

At the hearing in bankruptcy court, attorneys for Gabriel said the company owes $6.7 million on a revolving line of credit with PNC Bank that expired Sept. 30. Gabriel also owes its liquor suppliers, Glazer’s Beer and Beverage and Republic National Distributing Company, $4 million.

In July, the Gabriel family considered a merger with another Texas retailer “that had the financial resources to weather the tougher competition in San Antonio,” stated the filing. The deal ultimately fell through, however, and Gabriel Holdings was unable to pay its suppliers.

The Texas Alcoholic Beverage Commission (TABC) then placed Gabriel’s stores on its delinquent list, which prohibits liquor wholesalers from selling or delivering to them. As a result, the company ceased its wholesale operation and has been moving wholesale liquor inventory to its retail stores in order to keep the shelves stocked.

But approval of the company’s cash management plan from Judge Ronald King of the U.S. Bankruptcy Court for the Western District of Texas will allow Gabriel to begin purchasing liquor again as soon as Wednesday.

With the holiday season approaching, attorney Thomas Rice said Gabriel needs to purchase liquor to generate positive cash flow and pay its creditors. The bankruptcy filing will make it possible for suppliers to sell liquor to Gabriel’s stores on a “cash on delivery” basis.

Founded in 1948, the Gabriel family has managed a chain of package stores on street corners in South Texas for three generations. The company employs 250 people in 15 package store locations as Gabriel’s Liquor and in 30 Don’s & Ben’s Liquor stores, according to the bankruptcy filing.

An influx of big-box retailers, including Houston-based Spec’s and Maryland-based Total Wine & More, to San Antonio led to several stores becoming unprofitable and also hurting Gabriel’s wholesale business.

In 2013, Total Wine & More opened its first stores in San Antonio after fending off legal challenges brought by Gabriel that accused the company of failing to clarify its non-Texas ownership in seeking TABC permits.

The 28-year-old Total Wine sells about 8,000 wines, 3,000 spirits and 2,500 beers at each of its 199 superstores across 23 states. It has three locations in San Antonio.

During Tuesday’s hearing, an attorney representing H-E-B, which leases space for nine Gabriel’s stores, objected to a motion allowing Gabriel to delay lease payments for 60 days. But King approved the motion based on Rice’s argument that the reorganization budget does not allow for paying rent at this time.

Gabriel is scheduled to appear before the bankruptcy judge again Oct. 17 to present a motion seeking interim relief of cash collateral use. In the meantime, a motion for Gabriel to honor its customers’ $43,000 in outstanding gift cards during the bankruptcy period was approved.

Shari Biediger has been covering business and development for the San Antonio Report since 2017. A graduate of St. Mary’s University, she has worked in the corporate and nonprofit worlds in San Antonio...