On the Border files Chapter 7 bankruptcy after mass restaurant closures

On The Border filed for Chapter 7 liquidation on June 19, four days after shutting its last 28 company-owned restaurants and leaving only five franchised U.S. units and franchises in South Korea operating. The filing marked a hard stop for a chain that had tried to reset itself just over a year earlier, only to see the turnaround collapse into wind-down.

The June filing came from OTB Hospitality and said the company had less than $1 million in assets and $6.2 million in liabilities. It also said the process would begin an orderly liquidation under a Chapter 7 trustee and applied only to that legal entity, not to Pappas Restaurants. OTB Hospitality said it had spent the past year trying to stabilize the business, but concluded the chain would require substantial ongoing investment.

That is a different story from the one On The Border told in March 2025, when it filed Chapter 11 in the U.S. Bankruptcy Court for the Northern District of Georgia. At the time, the company said it planned to pursue a sale of substantially all of its assets and secured $10 million in debtor-in-possession financing from an affiliate of Pappas Restaurants. The company said then that it had 80 restaurants in the United States and internationally, and that the Chapter 11 process would help address financial and operational challenges and let the brand emerge stronger.

By June 12, that narrative had unraveled. The company closed all 28 remaining company-owned locations, including restaurants in Oklahoma City, Tulsa, Grand Rapids, Michigan, Bucks County, Pennsylvania, and Wichita Falls, Texas. What remained were a handful of franchised restaurants in the United States, including locations in South Dakota, Florida, Nevada and California, plus units in South Korea.

For Pizza Hut workers, the difference between a strategic closure and terminal collapse matters. Restaurant systems can survive a bad quarter, a store redraw, or a painful menu reset. They do not survive long when store cuts stop looking like a reset and start looking like the only way to slow the bleed. On The Border’s path showed that sequence in real time: Chapter 11, a financing package, a promise to sell, then a shrinking footprint, and finally Chapter 7.

That progression is the warning sign for franchise crews, delivery drivers and managers who know how fast labor schedules, tips and local traffic can change when a brand loses momentum. A chain can stay open long enough to look stable right up until the final stores close.