(Bloomberg) — Pappas Restaurants is preparing to acquire On The Border Mexican Grill & Cantina and help the Tex-Mex chain emerge from bankruptcy, according to people familiar with the matter.
Most Read from Bloomberg
The Texas-based parent of brands like Pappas Bros. Steakhouse, Pappas Bar-B-Q and Pappadeaux Seafood Kitchen has made a bid to take over On The Border as part of a sale in bankruptcy court, said the people, who asked not to be named discussing private bidding information.
A unit affiliated with Pappas Restaurants is listed in court documents as a lender of recent bridge and other financing to the bankrupt company. The filings indicated that lender would likely become a stalking-horse bidder, making it the de facto buyer if no more competitive offers emerge.
Representatives for On The Border and Pappas Restaurants did not respond to requests for comment.
The Pappas family has been operating restaurants since the late-nineteenth century, according to the firm’s website, and now runs nine different dining brands.
Elsewhere in casual dining, Hooters of America is also mulling a potential restructuring that would hand control of the brand from private equity sponsors to a group of operators — in that case, to the same Florida businessmen that founded Hooters in 1983.
On The Border filed for bankruptcy protection on March 4 in Atlanta, part of a recent wave of troubled dining chains that have cited challenges such as labor costs, falling customer traffic and inflationary pressures. Restaurant companies or franchisees last year filed for credit protection at levels not seen since 2020, according to BankruptcyData,
Founded in Dallas in 1982, On The Border counts more than 80 restaurants in the US and South Korea, where it opened its first location 18 years ago. It had 160 locations in 2010, OTB Chief Restructuring Officer Jonathan Tibus wrote in a separate court filing, before it was sold to an affiliate of private equity firm Golden Gate Capital Corp.
That firm — now called Golden Gate Capital — then sold On The Border to Argonne Capital Group, LLC in 2014. Argonne partnered with an affiliate of Fortress Investment Group, LLC on the deal.
The case is OTB Holding LLC, case number 25-52415, U.S. Bankruptcy Court Northern District of Georgia (Atlanta).
