{"data":{"id":"us-ky/krs-243.540","jurisdiction":"us-ky","citation":"KRS 243.540","heading":"Scope of section -- Disposition of stock upon revocation, surrender, court","body":"disposition, or nonrenewal of license -- Disposition upon bankruptcy --\nDisposition by secured creditor or landlord -- Administrative regulations.\n(1) The provisions of this section shall apply to any licensee who is unable to continue\nin business at the licensed premises because of:\n(a) An act of God;\n(b) A casualty;\n(c) An acquisition by a federal, state, city, or other governmental agency under\nthe power of eminent domain granted to the government or agency;\n(d) A voluntary or involuntary acquisition by any corporation or other business\nentity recognized by law through the power of eminent domain;\n(e) A loss of lease because the landlord fails to renew an existing lease;\n(f) Court action;\n(g) Default under a security agreement;\n(h) Default under a lease; or\n(i) Other verifiable business reason.\n(2) If a license issued by the department has been revoked, the former licensee may,\nunder the supervision of the state administrator, dispose of and transfer the former\nlicensee's stock to another licensee if the disposition is completed within ninety (90)\ndays and the licensee is a distiller, rectifier, winery, or brewer. The disposition shall\nbe completed within thirty (30) days if the licensee is a wholesaler or distributor or\nwithin twenty (20) days if the licensee is a retailer.\n(3) A retail licensee in g ood standing with the department who voluntarily ceases to\noperate the licensed business for any reason other than revocation by the board or a\ncourt order shall dispose of all alcoholic beverage or cannabis -infused beverage\ninventory within thirty (30) da ys of the event. The following requirements shall\napply to the disposition of the licensee's inventory:\n(a) If the premises is still open to the public and the licensee has not yet\nsurrendered the license, the licensee shall sell alcoholic beverages or\ncannabis-infused beverages only to the public and shall not sell below costs;\n(b) If a licensee has terminated the licensed business, the licensee shall submit a\nwritten request for approval from the state administrator within ten (10) days\nin advance of the sale to dispose of the licensee's remaining inventory. The\nrequest shall identify the retailer who is purchasing the inventory, the\nproposed date of the sale, and the quantity, types, and brands of alcoholic\nbeverages or cannabis-infused beverages to be sold; and\n(c) If a licensee has more than one (1) licensed retail premises and closes one (1)\nor more retail premises and seeks to transfer the inventory to another licensed\nretail premises the licensee owns, the licensee shall submit a request in\nwriting to the state administrator at least ten (10) days before the inventory is\ntransferred. The request shall identify the premises to which the alcoholic\nbeverages or cannabis -infused beverages are being transferred, the proposed\ndate of the transfer, and the quantity, types, and brands of alcoholic beverages\nor cannabis-infused beverages to be sold.\n(4) If a licensee files for bankruptcy or is directed by a court to dispose of inventory to\nsatisfy a lien or judgment, the inventory may be sold only to a licensee holding any\nlicense that authorizes the possession and sale of those alcoholic beverages or\ncannabis-infused beverages. The bankrupt licensee or the licensee subject to the\ncourt order shall notify the department of the sale and shall attach a copy of the\ncourt order or the judgment directing the sale and a list of the quantity, types, and\nbrands of alcoholic beverages or cannabis -infused beverages to be sold, but if the\nlicensee fails to do so, the notification may be made by the bankruptcy trustee, the\nlienholder, or the judgment creditor. Any licensee who purchases the inventory\nshall notify the department within five (5) days after the transfer of the specific\ninventory sold.\n(5) A secured creditor or landlord that is in possession, custody, or control o f any\nalcoholic beverages owned by a licensee may dispose of those alcoholic beverages\nthrough the department's public auction as authorized by subsection (6) of this\nsection or may dispose of alcoholic beverages or cannabis -infused beverages in the\nfollowing manner:\n(a) The secured creditor or landlord shall submit a written request for approval\nfrom the state administrator, within twenty (20) days in advance of the sale or\ndestruction of the licensee's remaining inventory. The request shall identify\nthe:\n1. Licensee who is purchasing the inventory or the business to destroy the\ninventory;\n2. Proposed date of the sale or destruction; and\n3. Quantity, types, and brands of alcoholic beverages or cannabis -infused\nbeverages to be sold or destroyed;\n(b) The proposed transferee or transferees may be any person or persons holding\nany license that authorizes the possession and sale of those alcoholic\nbeverages or cannabis -infused beverages, or a business authorized to dispose\nof alcoholic beverages or cannabis-infused beverages;\n(c) A copy of the written request shall be mailed by the department to the\nlicensee's registered agent or last known address on file with the department\nby certified mail. Within ten (10) days after the department's mailing of this\nrequest, the licensee shall file with the department and applicant any objection\nthe licensee has to the request, or be permanently barred from objecting; and\n(d) If a sale is approved, the licensee who purchases the inventory shall notify the\ndepartment within five (5) days after the transfer of that specific inventory.\n(6) The board may promulgate administrative regulations for additional means for the\ntransfer or disposal of alcoholic beverage inventory, including procedures to allow\nthe board to dispose of the inventory through public auction if:\n(a) A final order relating to those alcoholic beverages has been entered after all\nadministrative and judicial proceedings are conducted, if applicable;\n(b) The entire proceeds of the public auction are donated to the alc ohol wellness\nand responsibility education fund established in KRS 211.285; and\n(c) The board deems the inventory safe to release to the public, including but not\nlimited to the alcoholic beverages being in their original, unopened packaging.","path":["KRS Chapter 243"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=55940","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:52:54Z","sha256":"dd06de83dd46302a25d921ad6a10f1d70c75ac23156745fc80a15c942446ba53","source_id":"us-ky","stale":false,"prev":"us-ky/krs-243.530","next":"us-ky/krs-243.550"},"notice":"GroundRules: Original legal text. Not legal advice."}