On The Border: Sale Case Ended in Liquidating Plan

On The Border's chapter 11 case in the Northern District of Georgia (Case No. 25-52415) resulted in a sale of substantially all assets followed by a liquidating plan. The restaurant chain filed chapter 11 on March 4, 2025 after closing 40 stores roughly a week earlier, and the First Day Declaration says management entered bankruptcy facing inflationary cost pressure, labor shortages, weaker consumer demand for dining out, and a portfolio of underperforming restaurants.

On The Border said in its bankruptcy press release that restaurants would remain open during the case while it pursued a sale, and the later Disclosure Statement confirms that the sale closed on May 30, 2025 before the debtors moved into a liquidating plan that left general unsecured creditors with an estimated 5% to 10% recovery and equity with no recovery.

Debtor(s)	OTB Holding LLC, et al.
Court	U.S. Bankruptcy Court, Northern District of Georgia
Case Number	25-52415
Petition Date	March 4, 2025
Confirmation Date	September 8, 2025
DIP Facility	$15 million final facility with OTB Lender LLC, including about $4 million of rolled-up bridge debt

Pre-Filing Closures and Causes of Distress

On The Border entered chapter 11 as a casual-dining chain with 60 corporate-owned restaurants across 18 states and 20 franchised locations in the United States and South Korea as of the petition date. The First Day Declaration says the debtors employed about 2,800 people, including roughly 40 employees at the Irving, Texas support center and the balance in field operations, with no unionized workforce. The debtors had already closed and vacated 40 stores on or about February 24, 2025.

The declaration says commodity and labor inflation, customer sensitivity around discretionary restaurant spending, and lease costs at underperforming locations compressed liquidity as the company explored strategic alternatives. The First Day Declaration describes a rapid liquidity deterioration that led the debtors to delay vendor and rent payments while seeking bridge financing and a going-concern sale. A MassLive report on the filing likewise tied the chapter 11 filing to nationwide closures and the company's effort to keep the remaining restaurants open while pursuing a sale. FOX 5 Atlanta reported that all six of On The Border's Georgia locations had closed, noting a broader downturn in the casual dining sector. Bloomberg reported that the company listed estimated assets and liabilities each between $10 million and $50 million.

The debtors reported about $19.6 million of funded debt at filing, including roughly $11.75 million under a CrossFirst Bank facility, about $4.032 million of bridge financing from OTB Lender LLC, and an approximately $3.82 million secured claim held by U.S. Foods. The First Day Declaration also says the bridge lender was affiliated with Pappas Restaurants and that the financing was arranged in February 2025 while the company sought a going-concern transaction.

DIP Financing and OTB Lender Control

On The Border said in its public announcement that it had secured $10 million in DIP financing from OTB Lender LLC and expected to enter into an asset purchase agreement with an affiliate of that lender shortly after filing.

The court-approved structure ended up slightly differently. The Final DIP Order approved a $15 million postpetition facility with $1 million of incremental availability and rolled roughly $4 million of prepetition bridge principal, plus accrued interest, into the DIP loans. The order granted CrossFirst adequate protection for any diminution in value of its collateral and included a carve-out for statutory fees, trustee fees, and capped professional fees for debtor and committee professionals after a trigger notice. The order also required a segregated professional-fee reserve and gave the official committee a $35,000 investigation budget to evaluate the debtors' stipulations and related lien and claim issues.

Key professionals. On The Border's press release identified King & Spalding as legal advisor, Alvarez & Marsal as financial advisor and CRO provider, and Hilco Corporate Finance as investment banker. The King & Spalding retention application disclosed a $425,030 prepetition retainer. The Hilco retention application set a $25,000 monthly fee and a transaction fee structure with a $750,000 floor, with 50% of monthly fees credited against the transaction fee beginning with the third monthly payment. The Alvarez & Marsal retention application covered CRO services by Jonathan Tibus using hourly billing rates and included a $500,000 completion fee tied to consummation of a chapter 11 plan or a sale of substantially all assets.

KERP. The KERP motion covered 22 non-insider participants across key operating and support functions with an aggregate cost of about $305,000 and one-time payments tied to remaining employed through the earlier of 90 days after the petition date or consummation of the sale.

Stalking Horse Sale and OTB Hospitality Auction

The Bidding Procedures Order approved a stalking-horse structure around an amended and restated asset purchase agreement dated April 1, 2025, with an initial overbid threshold equal to the stalking-horse price plus bid protections and another $150,000, and later overbids required at least $250,000 increments. The order approved a $550,000 breakup fee and up to $350,000 of expense reimbursement if another buyer closed on the assets, and set a May 1 bid deadline, a May 6 auction in Atlanta, and a May 16 sale hearing. The order also required cure notices and cure-objection procedures for assumed executory contracts and leases.

Bloomberg reported that the Pappas dining empire had submitted the stalking-horse bid for On The Border, consistent with the prepetition bridge financing relationship between OTB Lender LLC and Pappas Restaurants described in the First Day Declaration.

The notice naming OTB Hospitality, LLC as prevailing bidder says the auction took place on May 6, 2025 and identified Salud Brands LLC as backup bidder. The disclosure statement says the debtors signed the asset purchase agreement with the purchaser that day and closed the sale on May 30, 2025.

The Disclosure Statement describes the transaction as a $36.25 million bid made up of a credit bid for the prepetition secured note obligations and DIP obligations plus additional cash consideration, including a $19.85 million cash component.

Liquidating Plan, Confirmation, and Creditor Recovery

After the sale closed, the debtors moved into a liquidation framework. The Amended Joint Chapter 11 Plan created a liquidating trust and appointed a wind-down officer to administer retained property, including retained liquor-license sale proceeds and other remaining assets.

The Disclosure Statement projected 100% recoveries for administrative claims, priority tax claims, miscellaneous secured claims, secured lender claims, and other priority claims. Class 4 general unsecured claims were projected to recover 5% to 10%, while Class 5 equity interests were projected to receive no distribution. Only Class 4 general unsecured claims voted on the plan, which did not include third-party releases.

The court entered the Confirmation Order on September 8, 2025, finding Classes 1 through 3 unimpaired, Class 4 impaired and accepting, and Class 5 impaired and deemed to reject. The order approved the liquidating trust structure and selected META Advisors LLC as liquidating trustee effective on the plan's effective date. The Notice of Confirmation and Effective Date says the plan became effective on September 16, 2025 and set post-effective-date deadlines including 30 days for most administrative claims, 45 days for professional compensation requests, and 30 days for rejection-damages claims.

The Bar Date Motion had earlier set a May 29, 2025 general claims bar date and an October 21, 2025 governmental bar date, with claims required to be filed on Official Form 410 either electronically through Verita's portal or by physical delivery to the claims agent. The motion treated section 503(b)(9) claims as claims that had to be asserted through the bar-date process.

Key Timeline

Frequently Asked Questions

Who bought On The Border out of bankruptcy?

The disclosure statement says the debtors executed the asset purchase agreement with the purchaser on May 6, 2025, and the prevailing bidder notice identified OTB Hospitality, LLC as the winning bidder. Bloomberg reported that the Pappas dining empire was behind the bid, consistent with the prepetition bridge-lending relationship between OTB Lender LLC and Pappas Restaurants.

Did On The Border reorganize or liquidate in chapter 11?

The case ended in a liquidation framework. The confirmed plan created a liquidating trust administered by META Advisors LLC as liquidating trustee, and the effective date notice shows the debtors moved into post-effective-date wind-down and claims administration after the sale closed.

What were unsecured creditors expected to recover?

The debtors' Disclosure Statement projected 5% to 10% recoveries for Class 4 general unsecured claims and no recovery for equity interests.

What were the key bar dates for filing claims?

The Bar Date Motion set a May 29, 2025 general claims bar date and an October 21, 2025 governmental bar date. Claims had to be filed on Official Form 410 either electronically through Verita's portal or by physical delivery to the claims agent.

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