MLCC Approval is Required to Transfer Interest in a Restaurant or Bar with a Liquor License
Have you shifted or transferred ownership in your Michigan corporation or limited liability company without consulting an attorney about the implications related to your liquor license? Most restaurant and bar owners are aware that they need to acquire a liquor license to operate an establishment that serves alcohol. However, what many restaurant and bar owners don’t realize is that they must file paperwork with the Michigan Liquor Control Commission (the “MLCC”) to transfer equitable interests in the entity holding the license.
Most restaurants and bars put their liquor license in the name of their legal entity, usually either a limited liability company or a corporation. As such, under Michigan law, transferring either shares in a corporation holding a liquor license or transferring membership interest in a limited liability company holding a liquor license requires review by the MLCC. Whether this approval must take place prior to the transfer or after depends on the percentage of the shares or membership interest being transferred.
Many restaurant owners fall into the trap of conveying a portion of their legal entity holding liquor license with the standard corporate documents, such as equity transfer documents and updating their corporate records, without realizing that MLCC approval is necessary. Doing so is likely to cause issues down the road. If and when the MLCC realizes that there was a transfer without an approval, the MLCC has authority to fine and penalize the licensee. If not discovered earlier, discovery by the MLCC is likely to take place when the entity or liquor license is eventually sold. At that point, there will be a discrepancy between the ownership of the entity shown in the purchase documents, which will need to be disclosed to the MLCC, and those in the MLCC records, which will often trigger fines, penalties, and other complications.
Our attorneys at Mika Meyers are knowledgeable and experienced in corporate matters and in advising bars and restaurants in matters related to liquor licensing. Please feel free to reach out to our firm at 616-632-8000 and ask for Curtis Underwood or Benjamin Zainea if you have any questions or think you may need assistance in transferring an interest in an entity with a liquor license.