Taco Bueno files bankruptcy; Sun Holdings affiliate acquires bank debt

By Caroline Salls

Pittsburgh, Nov. 7 – Taco Bueno Restaurants LP entered into an agreement with Sun Holdings, Inc. affiliate Taco Supremo, LLC and other stakeholders regarding the terms of a comprehensive financial restructuring that will position the company for long-term financial health and enable it to better compete in the Tex-Mex quick-service restaurant sector, according to a news release.

To implement the restructuring process, Taco Bueno made a pre-packaged Chapter 11 bankruptcy filing Tuesday in the U.S. Bankruptcy Court for the Northern District of Texas.

Before the bankruptcy filing, Taco Supremo acquired all of Taco Bueno’s outstanding bank debt and provided a commitment for up to $10 million in debtor-in-possession financing to support the company’s operations during the financial restructuring process.

Interest on the DIP financing will accrue at a rate of 7%.

The facility will mature on March 6.

A total of $3 million of the DIP financing will be available on an interim basis.

Upon Taco Bueno’s completion of its restructuring, Sun Holdings intends to invest in remodeling Taco Bueno locations, increasing brand initiatives and enhancing the customer experience.

Taco Bueno said it will continue to operate in the ordinary course of business during the restructuring process. The company said it expects to continue operating restaurants across Texas, Oklahoma, Arkansas, Kansas, Louisiana and Missouri, including restaurants independently owned and operated by franchisees that are not part of the Chapter 11 proceedings.

Under the terms of Taco Bueno’s pre-packaged plan of reorganization, Sun Holdings would become the owner of Taco Bueno through a debt-for-equity swap.

Priority claims will be paid in full in cash.

Other secured claims will be paid in full in cash or reinstated or the holders of these claims will receive the collateral securing the claim.

Holders of general unsecured claims and TB Holding interests will receive no distribution.

The restructuring support agreement requires the plan to take effect by Jan. 22.

“During this court-supervised process, we will continue to focus on initiatives to grow the Taco Bueno brand, while remaining true to our roots,” Taco Bueno chief executive officer Omar Janjua said in the release.

In conjunction with the Chapter 11 process, Taco Bueno has filed a number of motions to support its operations during the financial restructuring process, including authority to continue to pay employee wages and provide health and other benefits, and to pay vendors and suppliers for all goods and services provided on or after the Chapter 11 filing date.

According to court documents, Taco Bueno has $10 million to $50 million in assets and $100 million to $500 million in debt.

The company’s largest unsecured creditor is Taco Supremo, based in Dallas, with a $104.9 million lender claim. No other unsecured creditors were listed with unsecured claims of $1 million or more.

Vinson & Elkins LLP is acting as the company’s legal adviser, Houlihan Lokey is acting as its financial adviser, Berkeley Research Group is acting as its restructuring adviser and JLL is acting as its real estate adviser.

Taco Bueno is an Irving, Texas-based restaurant operator. The Chapter 11 case number is 18-33678.

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