On the Border files for Chapter 7 bankruptcy after mass closures

On the Border filed for Chapter 7 bankruptcy on June 19, days after closing most of its restaurants and about a year after emerging from Chapter 11 bankruptcy.

The company listed $752,945 in assets — all personal property — and $6.2 million in liabilities, according to bankruptcy documents filed in the Southern District of Texas.

Its largest creditor is owner Pappas Restaurants, the Houston-based multiconcept operator that acquired On the Border in May 2025. Pappas is owed more than $4.7 million, according to the documents.

Pappas lent On the Border $10 million in debtor-in-possession financing to help the chain continue operating during its Chapter 11 proceedings.

On June 12, On the Border abruptly closed its 28 company-owned locations, leaving the brand with just five franchised restaurants in the U.S. They will continue to operate independently, along with franchised On the Borders in South Korea.

The company said the closures followed a “thorough evaluation of the business” and that it was exploring “a range of strategic options” moving forward.

Liquidating its assets will allow creditors to get some reimbursement.

The move concludes a long decline for On the Border that accelerated over the past two years.

Founded in 1982 in Dallas, the chain was known for fajitas, margaritas, and guacamole that was prepared tableside. It was acquired by Chili’s owner Brinker International in 1994 and by 2007 had grown to 166 locations.

But it began to see persistent sales declines starting in 2008 amid the Great Recession. In 2010, Brinker sold it to private-equity firm Golden Gate Capital, and Golden Gate sold it to Argonne Capital Group in 2014.

The company closed a large number of locations in 2024 and 2025, including 77 leading up to its Chapter 11 filing last March. It had 80 restaurants when Pappas acquired it that May, and by the end of last year, it was down to 57, according to Technomic data.

In the 12 months ahead of its Chapter 7 filing, On the Border generated more than $111 million in revenue, plus $1.5 million in royalties, according to bankruptcy documents.

It’s one of a number of full-service restaurant chains to shut down completely over the past year, a reflection of the difficult operating environment and limited financing for such concepts.