Hargett Hunter Capital Management will pay $6.5 million for Trudy’s Texas Star after winning an auction in bankruptcy court last week.
Trudy’s operates three locations in Austin, along with the South Congress Café.
The 43-year-old company declared bankruptcy in January. Cash flow and financing challenges during the coronavirus pandemic ultimately led the company to decide on a sale through bankruptcy court.
Trudy’s could not come to an agreement with either of two potential bidders before a judge in May ordered the company to speed the sale process, according to court documents.
That order came at the request of one of the company’s creditors, after one of the chain’s locations caught fire last November. That location was closed, with a tarp covering a hole in the roof from the fire for several months. The judge also ordered the repair of that location.
Trudy’s has been operating in Austin since 1977. According to a bankruptcy court filing, the company’s financial problems started when it opened a large restaurant, Trudy’s Four Star, an a five-acre site back in 2011.
The company said the location lost nearly $1 million a year until it was finally closed in 2019. The losses “placed a substantial dent in the company’s finances,” leading Trudy’s to fall behind on payroll taxes, state taxes and payments to suppliers and employees.
Trudy’s ultimately declared bankruptcy when the IRS froze its credit card receipts. Trudy’s also fell behind on payments to employees.
Hargett Hunter is an investment firm overseen by Jeff Brock, who is also a partner with Hargett Hunter Capital Partners, a Raleigh, N.C.-based private equity firm traditionally known for its investments in growth chains, including Marugame Udon, Original ChopShop and Bellagreen. The two Hargett Hunter firms are separate.
UPDATE: This story has been updated to clarify the status of Hargett Hunter.
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