Z’Tejas Southwestern Grill, a portfolio company of KarpReilly LLC, has filed for Chapter 11 bankruptcy protection in Arizona.
Cornbread Ventures LP has made a stalking horse bid for Z’Tejas and offered to pay roughly $4 million, including $1.38 million credit, $2.34 million cash plus the assumption of debt, for the restaurant chain, a bankruptcy court filing dated July 22 said. A deadline for competing bids and sale objections is set for Sept.15, while an auction is scheduled for Sept. 17. The Z’Tejas sale hearing is slated for Sept. 25, the filings said.
No information was available about Cornbread Ventures as of press time.
Austin-based Z’Tejas offers Southwestern-style cuisine through its nine full service restaurants in Arizona, Texas and California. Dishes include Red Chile & Mango Steak Salad, Diablo Pasta and Chorizo-stuffed Pork Tenderloin. Z’Tejas also operates a separate dining concept, “Taco Guild,” a pub style eatery, that is also included in the bankruptcy.
KarpReilly invested in Z’Tejas in May 2007 when it took a majority stake. The deal was valued at between $25 million to $35 million, according to press reports at the time.
Z’Tejas has suffered from reduced consumer discretionary spending, a competitive industry plus its over-leveraged balance sheet, which have all adversely impacted the company’s financial performance, the filing said. Z’Tejas began exploring strategic options last year and hired Mastodon Ventures Inc. to find a buyer, PE HUB has reported. Mastodon also advised Elephant Bar, another KarpReilly restaurant, which ended up filing for bankruptcy protection in June 2014.
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