On The Border closes company-owned restaurants after bankruptcy sale

On The Border Mexican Grill & Cantina is closing its company-owned restaurants by the end of the day, turning a normal shift into an immediate job-loss event for servers, bartenders, line cooks, hosts and managers. For hourly crews, the hardest part is not the bankruptcy paperwork. It is the sudden loss of shifts, tip income, and any clear answer about what gets paid next.

The Dallas-based chain had filed for Chapter 11 bankruptcy on March 4, 2025, in the U.S. Bankruptcy Court for the Northern District of Georgia. In that filing, the company said it had secured $10 million in debtor-in-possession financing from OTB Lender, LLC, an affiliate of Pappas Restaurants, to keep the process moving while it pursued a sale of substantially all assets. Industry reporting said On The Border was carrying more than $25 million in debt and had more than 10,000 creditors at the time, after already closing about 40 stores shortly before the filing.

The chain’s portfolio was still said to include about 80 locations across the United States and South Korea before the sale to Pappas Restaurants moved forward. The bankruptcy court approved that deal on May 15, 2025, and the acquisition was finalized in May 2025. Pappas Restaurants, based in Houston, runs roughly 90 restaurants under brands including Pappadeaux Seafood Kitchen, Pappasito’s Cantina and Pappas Bar-B-Q.

For workers, a company-wide shutdown raises the questions that matter in the first 48 hours after the doors close: when final paychecks will arrive, whether accrued PTO will be paid, how tip-outs and final tip reconciliation will be handled, and whether anyone is offering a transfer to another brand or sister concept. It also leaves staff asking who is answering questions about unemployment claims and health coverage after the schedule disappears.

Federal COBRA guidance says some workers can temporarily keep job-based health coverage after a layoff, but only if the employer’s group health plan still exists. If the plan terminates, COBRA may not be available, and workers may need to look to Marketplace coverage instead. That is a critical distinction for restaurant employees whose insurance often depends on whether the company keeps any plan alive after the shutdown.

On The Border’s collapse also fits a familiar casual-dining pattern: labor shortages, weaker consumer demand, underperforming restaurants, creditor pressure and inflation can pile up until a chain starts closing units to conserve cash. For restaurant workers, the lesson is blunt. Bankruptcy is not just a corporate event. It can wipe out a schedule overnight, and WARN rules, which generally require advance notice for certain mass layoffs and plant closings, are often the only protection standing between a crew and a same-day shutdown.