Spirited debate over Senor Frogs’ liquor licence

How much is a licence to sell alcohol in the Cayman Islands worth? Does it have any assessable monetary value at all? 

Legal wrangling between a shuttered downtown hotspot and the company’s liquidators sparked potentially significant questions around what is typically a routine application before the Liquor Licensing Board. 

 

Whose property? 

During the board’s quarterly meeting Thursday, Stefan Baraud, the former owner of Senor Frogs, requested that the board allow his retail liquor licence, restaurant liquor licence and music and dancing licence to be transferred to Matthew Wight, for use at a new establishment planned north of Rackham’s Pub and Restaurant on the North Church Street waterfront. 

“The variation, Mr. Chairman, is simply the change of location, which is no more than a standard process that happens quite often from one licensee to the other, or one premises to another,” Mr. Baraud told the Board. “So what I’m asking is nothing outside the realm of what is the norm.” 

Mr. Baraud said the reason for the transfer of the licence is because it has not been in use since Senor Frogs closed in May 2010. The Grand Court of the Cayman Islands placed the company in liquidation in response to a petition filed by major creditor dms Properties, which claimed in late October 2010 that Senor Frogs owed it more than US$57,000 after failing to pay rent from February to May 2010. 

From 2004-2010, Senor Frogs rented two units at Madison Place on Fort Street in downtown George Town. In 2006, dms purchased those two units and became the landlord for Senor Frogs. 

Court-appointed liquidator Timothy Le Cornu of Krys & Associates argued before the board that the licence issued to Mr. Baraud for Senor Frogs was an asset of the company and therefore should not be transferred until the winding up process is complete. 

To the contrary, Mr. Baraud said the licence belongs to him personally, not the company. His mother Betty Baraud told the board that the licence was initially issued to her when she owned an establishment where Coconut Joe’s is located. Characterising the transaction as a “loan”, Ms Baraud said she had the licence transferred to her son with the understanding that she could have it back whenever she chose. 

“It is still my licence,” she said. 

Board Chairman Mitchell Welds said, “I tend to disagree, Ms Baraud. It is really Stefan’s licence at the moment. I understand the history of the licence, but I tend to disagree that it’s still your licence. A licence is issued to an individual and Stefan is the sole licensee at this point.” 

Ms Baraud said, “I’m presuming that if I allowed him to operate under the licence that it has always been my licence, and therefore it is my licence. The board certainly has the right to see it whichever way, but that is my opinion.” 

She said, “I don’t know if I need a legal opinion about it. I certainly don’t want to go into that sort of expense. But it was the understanding with him and myself that if tomorrow I wanted to operate, he’d have to transfer it back to me because it was my licence.” 

Mr. Welds said again that Mr. Baraud is the sole licence holder under the law, and that the situation might be different if Ms Baraud had also been listed as a co-licensee, but she is not. 

 

How much? 

From the liquidators’ perspective, Mr. Le Cornu said that whether the licence is determined to be an asset of the company or of Mr. Baraud, either way they still object to its transfer. 

“We believe that the licence is an integral part of the business. Without the licence, the business would be unable to operate and generate its revenue. There are creditors of a large amount of outstanding debts due from the company, and we consider this is an asset that should be realised by the liquidators for the benefit of the creditors,” Mr. Le Cornu said. 

He said, “The liquidators also have plans against Mr. Baraud in his personal capacity, and in that case will also seek to object to any transfer of the licence in the event that there may be some value attached to it.” 

Board member Neil Bryington said, “The reality is that a liquor licence essentially does not, is not supposed to have a monetary value. It’s not supposed to be taken as a goodwill within the business within the context of the Cayman Islands, I believe. I am aware of liquor licences that had been transferred for monetary value, but I do not believe that’s allowed, so therefore I don’t believe there’s a financial attachment that can be made against a liquor licence.” 

Mr. Welds noted, “The law does not prohibit the sale of a liquor licence or music and dancing licence, and in the past we have had people that have received monetary contributions for the licences.” 

After retiring for private discussions on all the items on Thursday’s agenda, board members chose to defer their decision on whether to allow Mr. Baraud to transfer his licence to Mr. Wight. 

The next time the board convenes will be for its annual meeting in September. 

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8 COMMENTS

  1. It would seem to me that a Liquor Licence is the property of the Board, to be issued, altered, or withdrawn as the Board sees fit.

    It’s an interesting issue though. I hope the Compass stays with this story.

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  2. Why is a liquor licence transferable when other licences are not. Liquor licence transfer is nothing more than people selling the board’s approving authority for as much as they can get..

    When a business is sold, all licences should be null and void and and a new application for licence submitted for approval on it’s own merit.

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  3. I would dearly love for Caycompass to stay with this story, and the one on the accusations of the manager of the Attic in relation to the violent stabbings that happened in its vicinity…they are both related to liquor licensed premises.

    I have a special interest in hearing how the Senor Frog’s case is ultimately decided.

    In Cayman, as in Britian where these laws originate, liquor licenses are sold to an INDIVIDUAL by the authority responsible; in Cayman, that is the LLB.

    The law works basically the same in Cayman, as it does in Britain; these licenses are transferable through private negotiations, meaning one owner can sell/transfer their license to another party during the duration of the license but after its term expires, the new owner must apply for their own.

    Most licenses are sold as a private business deal between two parties but the license remains in the name of the original owner for LLB purposes…and the owner is paid for its use by the operator of the business; there is nothing or has there ever been, anything deemed illegal about this, either in Britain or Cayman.

    The license is not unique to a location, an owner can use it to operate in any location that is approved for such a business by the planning authorities.

    This situation of a family question of transfer of this license makes this a very interesting and unique situation…

    The fact that Senor Frog’s liquidators are intending to pursue Stefan Baraud’s personnell assets in settlement of the business’s creditors makes it even more so.

    Please Caycompass, keep us all updated on how this progresses.

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  4. Ms. Baraud’s explanation of how she just lent the license to her son sounds like a dress rehearsal of the script of Alice in Wonderland. If a violation occurred that results in revocation, would she claim that the license cannot be revoked because she lent it to her son and is not responsible for his transgressions which resulted in revocation? Its part of the assets and could be sold to a new owner therefore it is also attachable and can be seized for payment of just debts.

    so says the Not so Mad Hatter

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  5. LottaBaloney

    Where you’re wrong is that this liquor licence could not be sold or bought as any tangible asset of the original Senor Frog company.

    It was bought and paid for by Betty Baraud, an individual, whose son Stefaun was the main partner in Senor Frogs, along with others.

    If, for example, someone wished to take over the Senor Frogs franchise in Cayman…

    They would have to apply for their own liquor licence from the LLB.

    The ownership of the licence stays with the owner…

    It does not transfer with the sale or liquidation of the business.

    This entire matter might eventually have to be sorted out by a judge.

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