Tijuana Flats emerged from chapter 11 with its Florida Tex-Mex brand intact, its secured debt reset to $16.0 million, and its sponsor still in control after closing roughly 40 restaurants in the months around the filing. The reorganization avoided a traditional DIP facility, ran on the prepetition lender's cash collateral, absorbed two hurricanes, and reached a confirmed plan that left Flatheads, LLC holding the equity in exchange for fresh cash. Tijuana Flats Restaurants, LLC and Tijuana Flats #176, LLC filed chapter 11 petitions on April 19, 2024 in the U.S. Bankruptcy Court for the Middle District of Florida (Jacksonville Division), under lead case 3:24-bk-1128, alongside an ownership transition to Flatheads.
The case is a compact middle-market restaurant reorganization: modest funded debt, a single controlling secured lender, a prepetition closure program that took the chain from above 120 corporate restaurants to 65, and a lease portfolio spread across more than 60 landlords. What kept it out of liquidation was a sponsor willing to fund distributions and convert an emergency advance into equity, a vendor willing to extend postpetition credit, and a lender willing to take a haircut and stretch the maturity to 2028.
U.S. Bankruptcy Court, Middle District of Florida (Jacksonville Division)
Case Number
3:24-bk-1128 (lead)
Petition Date
April 19, 2024
Confirmation Date
January 17, 2025
Plan Effective Date
March 18, 2025
Secured Lender
LSC2022, LLC (assignee of Truist credit facility)
Claims Agent
Stretto, Inc.
Case Snapshot
Cash Collateral and the Liquidity Bridge
Tijuana Flats ran the case on LSC2022's cash collateral rather than a new money DIP. The emergency cash collateral motion sought authority to fund a 13-week operating budget covering payroll, payroll taxes, insurance, and lease obligations, supported by an adequate-protection package that included a replacement (rollover) lien on postpetition assets of the same type as the prepetition collateral, a section 507(b) superpriority administrative claim for the shortfall, and a $200,000 professional carve-out senior to that replacement lien. The court entered a consensual interim cash collateral order on April 24, 2024, and a final order on August 15, 2024 that kept the same structure and required monthly actual-to-budget variance reporting to LSC2022.
The cash collateral motion reported roughly $425,786 of cash in bank across Truist and Regions accounts, about $739,824 of credit-card and third-party receivables, and inventory of perishable food and paper with an estimated book value near $742,625. The motion stated that a material portion of those receivables reflected activity from recently closed restaurants.
Two operational moves shaped the budget. Before filing, each store had operated as a separate entity, complicating cash management and reporting; the debtors merged most operating subsidiaries into Restaurants, LLC in mid-April 2024 and continued a consolidated cash management system postpetition, a step the disclosure statement ties to simplified lease administration and reporting. The filing also triggered a wave of required utility deposits and bonds totaling roughly $189,000, prompting an emergency utilities motion that narrowed the cash runway just as postpetition sales softened.
Truist Facility and the LSC2022 Default
The prepetition capital stack originated in a March 4, 2022 credit agreement with Truist Bank that, per the cash collateral motion, provided a $20 million term loan and a $1 million revolver used to refinance roughly $19.8 million of earlier acquisition financing tied to AUA's 2015 purchase. The same filing describes a May 2023 requirement that the company post a $1.2 million interest reserve while continuing scheduled quarterly principal reductions of $250,000, a combination management said stripped working capital during an already difficult operating stretch.
Truist assigned the loan documents to LSC2022, LLC on March 26, 2024, and the cash collateral motion states that LSC2022 declared a default on April 2, 2024 after the debtors missed the quarterly installments due December 31, 2023 and March 31, 2024. The default left LSC2022, as blanket lienholder, in control of the debtors' cash.
At the petition date, the disclosure statement reported secured debt of approximately $18.804 million and total liabilities of about $26.906 million, a figure corroborated by the filed schedules. The unsecured and priority layers included priority taxes of about $851,105, accrued wages of $682,816, trade debt of roughly $5.65 million, and unpaid lease obligations of about $920,909.
Prepetition Debt Category
Amount (Approx.)
Secured debt (LSC2022)
$18.804 million
Priority taxes
$851,105
Wages
$682,816
Trade debt
$5.65 million
Lease obligations
$920,909
Total liabilities
$26.906 million
Prepetition Debt Snapshot
Store Closures and the 60-Landlord Lease Burden
Tijuana Flats entered chapter 11 after a rapid contraction. The disclosure statement describes 24 operating subsidiaries closed between February and April 2024, followed by 11 more unprofitable restaurants left out of the April 15 roll-up merger and closed that same week; the first-day cash collateral motion framed the contraction as 29 corporate-owned restaurants closed between January and April 2024. Public reporting on the chapter 11 filing described 11 immediate closures and a broader reduction of roughly 40 units, with local coverage noting the franchise network still reached multiple states.
What survived was a smaller, Florida-concentrated core. The disclosure statement reports 65 company-owned restaurants and 23 active franchised units, with trailing-twelve-month sales of $85,205,747 across the company-owned base and per-store volumes ranging from $845,506 to $1,780,058. The brand had peaked above 120 corporate restaurants and 26 franchised units before the downsizing, a footprint that traces to the 2015 partnership with AUA Private Equity Partners, which at the time highlighted 110 locations across multiple states.
The May rent suspension motion detailed leases from more than 60 landlords with aggregate monthly rent near $625,000 and prepetition rent due for January through April 2024 of roughly $940,000. The debtors sought to suspend May 2024 rent to bridge a projected $85,000 cash shortfall, fund utility deposits, and cover near-term operating needs — including roughly $307,000 of planned Cinco de Mayo promotions and menu improvements in the first week of May — while management stated rent payments were expected to resume in June 2024. The same motion noted the debtors were still absorbing losses at roughly 23 already-closed stores whose occupancy obligations had not yet been resolved. Lease assumptions themselves moved through a separate amended omnibus lease assumption motion rather than through the plan, with lease negotiations continuing across the landlord base through mid-2024.
US Foods and PACA Priority
The largest vendor relationship in the case was with US Foods, which agreed to keep supplying food products on 30-day postpetition credit terms with administrative priority. The postpetition financing motion resolved $2,816,853.37 of prepetition debt by splitting it among a PACA claim, a section 503(b)(9) claim, and a general unsecured residual, and the court granted the motion. Of the total, $235,588.04 was treated as a PACA claim payable from postpetition collections ahead of other claims, and $1,503,691.54 carried 503(b)(9) priority, with a remaining $828,210.12 balance scheduled across 12 monthly installments of $69,017.51.
The arrangement included a detailed waterfall for applying postpetition collections. US Foods held $895,914.28 in postpetition payments that were applied first to the PACA claim and then to the 503(b)(9) balance, with a $15,155.18 recall credit further reducing the priority claims. US Foods also agreed to release $282,569.69 in administrative fees back to the debtors. The motion secured continued food supply on 30-day postpetition terms while resolving the prepetition PACA and 503(b)(9) exposure.
US Foods Claim
Amount
Treatment
Total prepetition debt
$2,816,853.37
Split among PACA, 503(b)(9), and general unsecured
PACA claim
$235,588.04
Paid from postpetition collections first
503(b)(9) claim
$1,503,691.54
Priority with installment schedule
Remaining 503(b)(9) balance
$828,210.12
12 monthly installments of $69,017.51
US Foods Claim Structure
Menu Complexity and the Greco Turnaround
Court filings attribute the operating decline to more than cost inflation. The cash collateral motion describes a 2021–2022 menu expansion that increased preparation complexity, equipment and staffing needs, and service times, which management said raised costs, hurt the customer experience, and contributed to declining sales, all against a backdrop of food and labor inflation and changing consumer spending. Trade coverage of the turnaround reported a same-store sales decline and negative EBITDA heading into the filing.
The debtors reported approximately 1,500 employees and sought authority to pay $682,816.81 in prepetition wages, split between two pay groups — $435,684.75 for the Flats A group and $247,132.07 for Flats B. Employer benefit costs ran roughly $87,093 per month for medical coverage plus additional monthly dental, vision, life, and disability costs. The debtors did not offer a 401(k) match.
Management changed at the top during the case. The disclosure statement states that James J. Greco became CEO in June 2024 after the departure of Joseph D. Christina, who had joined as CEO in 2022 from Church's Texas Chicken, describing Greco as a restaurant turnaround operator with prior reorganizations at Sbarro and Bruegger's, and identifies Casey Rees as senior vice president of finance and David Pearl as a part-time fractional CFO. The same filings catalog the operational reset Greco oversaw: store refreshes, updated preparation procedures, portion-size increases, limited-time menu additions, elimination of duplicative store-level management layers, corrected labor-cost disparities among comparable-volume stores, and a move to bring social media advertising in-house. The post-filing leadership reporting framed the operational reset as the centerpiece of the stabilization effort. The turnaround showed results mid-case: by November 2024, the chain had reopened a shuttered location near the Mall at Millenia in Orlando, with menu changes and operational adjustments described as underway ahead of plan confirmation.
Hurricanes Helene and Milton and the Flatheads Loan
Hurricanes Helene and Milton struck in October 2024. The disclosure statement records revenue losses exceeding $250,000 from Hurricane Helene and more than $665,000 from Hurricane Milton, which made landfall October 9 and forced most locations to close for 48 to 72 hours, with at least ten stores still shuttered afterward and power-outage losses of perishable inventory above $85,000. The combined disruption left the debtors without enough liquidity to pay November rent on time, a situation covered in contemporaneous local reporting as the case moved toward confirmation.
The court granted the rent-suspension motion in part on November 5, 2024. The order excused timely November rent for affected locations generally, automatically granted those landlords section 503(b) administrative claims for the deferred rent, and required ordinary timely payment for a list of objecting landlords and specific stores named in the order — a structure that tied the deferral to the timing of insurance recoveries rather than to a permanent abatement.
Push Settlement and Confirmation Objections
The case was largely consensual but not entirely uncontested. The most significant standalone dispute involved Push, Inc., which filed a $53,295.89 administrative expense application arising from a prepetition marketing and promotional agreement. The debtors objected and separately sued to recover roughly $85,898 in alleged preferential transfers; rather than litigate both, the parties reached a walk-away settlement under which Push withdrew its administrative claim, the debtors dismissed the preference action with prejudice, Tijuana Flats kept a perpetual exclusive non-cancelable license to Push-created materials, and each side bore its own costs. The court approved the settlement in early 2025.
The remaining friction surfaced at confirmation. The confirmation order narrowed the plan's protective provisions: it deleted the exoneration provision entirely, limited the defined releasees, amended exculpation to carve out gross-negligence claims, and clarified that the plan's releases extended solely to the debtors. The court overruled confirmation objections from the Hillsborough County Tax Collector, objecting landlords, and the U.S. Trustee, while making clear that separate lease-assumption orders — not the plan — controlled lease issues.
Plan Treatment, Professional Fees, and Outcome
The confirmed plan set up a four-class structure anchored by the reset of LSC2022's secured claim. By agreement, the confirmation order valued that claim at $16.0 million against approximately $18.8 million of indebtedness, with interest at the Wall Street Journal Prime rate fixed at confirmation, a one-year interest-only period from July 1, 2025 through June 30, 2026, a 20-year amortization beginning July 1, 2026, and a balloon payment due June 30, 2028.
General unsecured creditors received fixed cash pools rather than percentage recoveries: $200,000 shared pro rata by the Restaurants, LLC class and $5,000 by the Tijuana Flats #176, LLC class, with priority tax claims payable in full over 60 months. Flatheads retained its equity only by funding new value — a $205,000 cash contribution to fund the unsecured pools plus reclassification of its $1.2 million emergency advance as a capital contribution, an amount the disclosure statement and confirmation record describe as exceeding the value of the retained interests. Implementation funding also relied on continued cash collateral use through the effective date and an LSC2022 exit line of credit that was increased from $1 million in the plan text to $1.5 million by confirmation.
Plan Term
Detail
Allowed secured claim
$16.0 million (from ~$18.8 million)
Interest rate
WSJ Prime, fixed at confirmation
Interest-only period
July 1, 2025 to June 30, 2026
Amortization / balloon
20-year schedule from July 2026; balloon June 30, 2028
GUC pools
$200,000 (Restaurants, LLC); $5,000 (#176, LLC)
Equity
Flatheads retains for $205,000 cash + $1.2M claim conversion
When did Tijuana Flats file for chapter 11, and where?
The debtors filed on April 19, 2024 in the U.S. Bankruptcy Court for the Middle District of Florida (Jacksonville Division), under lead case 3:24-bk-1128. The cases were jointly administered for Tijuana Flats Restaurants, LLC and Tijuana Flats #176, LLC.
Why did the company file?
Court filings cite a 2021–2022 menu expansion that slowed service and raised costs, food and labor inflation, a Truist-mandated $1.2 million interest reserve that drained working capital, and a closure wave that preceded an April 2, 2024 default declared by secured lender LSC2022.
Was there DIP financing?
No. The company operated on LSC2022's cash collateral under court-approved budgets, supplemented later by a $1.2 million emergency loan from sponsor Flatheads to bridge hurricane-driven losses.
How did Hurricanes Helene and Milton affect the case?
Filings attribute revenue losses exceeding $250,000 to Helene and more than $665,000 to Milton, with perishable-inventory losses above $85,000 and widespread temporary closures, which prompted the Flatheads emergency loan and a court-approved partial suspension of November 2024 rent.
How was the secured debt restructured?
The LSC2022 secured claim was allowed at $16.0 million, down from about $18.8 million, with interest at WSJ Prime, a one-year interest-only period from July 1, 2025, a 20-year amortization, and a balloon payment due June 30, 2028.
What did unsecured creditors receive, and who kept the equity?
General unsecured creditors received fixed cash pools of $200,000 (Restaurants, LLC) and $5,000 (#176, LLC). Flatheads retained equity by contributing $205,000 in cash and converting its $1.2 million emergency advance into a capital contribution.
Who is the claims agent for Tijuana Flats?
Stretto, Inc. served as the claims and noticing agent. The disclosure statement identifies Stretto's case-specific noticing and claims-register role alongside Thames | Markey as bankruptcy counsel.
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reopened a shuttered location near the Mall at Millenia https://www.wftv.com/news/local/tijuana-flats-celebrates-restaurants-comeback-near-mall-millenia/H3VHKXIX7ZGGPCSWBIZASAW4PI/
covered in contemporaneous local reporting https://finance.yahoo.com/news/hurricanes-add-pressure-tijuana-flats-195735707.html
Effective date and substantial consummation https://www.restaurantdive.com/news/tijuana-flats-exits-chapter-11-shares-menu-remodel-strategy/738179/
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. See the disclaimer.