Taco Bueno filed for federal bankruptcy protection Tuesday after reaching a deal that will ultimately cede ownership of the chain to a big, Dallas-based multiconcept franchisee, Sun Holdings.
Sun Holdings, which operates more than 800 locations for a number of brands such as Burger King, Arby’s and Popeyes, will become the owner of the chain in a debt-for-equity swap.
Sun, which recently acquired Taco Bueno’s bank debt, has agreed to invest in remodeling Taco Bueno locations, “increasing brand initiatives and enhancing the customer experience.”
Omar Janjua, CEO of Irving, Texas-based Taco Bueno, said in a statement that Sun has “a deep understanding of both the quick-service space and the region where we operate, which will enable us to be an even more attractive employer, business partner and dining staple in the communities we serve.”
Taco Bueno operates restaurants in Texas, Oklahoma, Arkansas, Kansas, Louisiana and Missouri. In September, the company closed 16 locations, or nearly 10% of its unit count.
Janjua, who had been CEO of Krystal, was named CEO of Taco Bueno in March.
Sun Holdings will provide up to $10 million in financing for Taco Bueno to get through bankruptcy. It will then swap the debt it holds on the chain for equity in the company and will become its owner.
Taco Bueno filed for bankruptcy in the U.S. Bankruptcy Court in the Northern District of Texas on Tuesday. The company claimed between $10 million and $50 million in assets and between $100 million and $500 million in liabilities, according to filings.
The acquisition of the Mexican quick-service chain will give Sun control of a brand for the first time following more than 20 years as a franchisee of several different concepts.
“We know quick service and the customer base well, and we see considerable opportunities to invest across the Taco Bueno footprint to enhance the customer experience and drive long-term growth for the brand,” Guillermo Perales, Sun’s founder and CEO, said in a statement.
The bankruptcy is the latest in a long string of filings by restaurant brands in recent months, including one just yesterday by the New England owner of Papa Gino’s and D’Angelo Grilled Sandwiches.