An interesting part of Pennsylvania’s Act 39 of 2016 (“Act 39”) has finally started to come to fruition. On September 13, 2016, the Pennsylvania Liquor Control Board (“PLCB”) issued a Press Release regarding the long anticipated auction of the 1,200 restaurant licenses (“R-licenses”) that have expired since 2000, which was enacted into law as part of Act 39 on August 8, 2016. Initially, 40 of these licenses, which people in the industry have referred to as “zombie licenses,” will be auctioned off to the highest bidder. Of the 40 zombie licenses, there are four licenses each in Philadelphia and Allegheny County, two licenses each in Butler, Cameron, Chester, Dauphin, Delaware, Erie, Indiana, Lancaster, Lehigh, Montgomery, Somerset, Westmoreland, and York counties, and one license each in Adams, Blair, Bucks, Centre, Cumberland, and Washington counties. Notably, the single zombie licenses available in Adams, Butler, Cameron and Cumberland counties are the only zombie licenses that will be available for auction in those counties. As a result, this auction will not affect license prices in those counties.
Bids for the 40 zombie licenses are due to the PLCB by October 27, 2016. The minimum bid for each license will be $25,000, which must be accompanied by an additional $5,000 “bid surety intended to avoid frivolous and underfunded bids.” After the deadline passes on October 27, 2016, the bids will be unsealed and the winners will be determined the week of October 31, 2016. The highest bid will win each respective zombie license, which will allow the winning bidder to submit an application for the license to the PLCB. The full payment of the bid price must be received by the PLCB within two weeks of the auction award announcement, or the second highest bidder will be deemed the winner and have the opportunity to submit an application to the PLCB and pay its bid price. All bid payments will be held in escrow by the PLCB pending approval of the license application.