Houston Pappas Restaurants Acquires Bankrupt On The Border

Pappas Restaurants, a Houston-based family-run company known for brands like Pappasito’s Cantina and Pappadeaux Seafood Kitchen, has won the auction to acquire On The Border Mexican Grill & Cantina, which filed for Chapter 11 bankruptcy earlier in 2025. Through an affiliate called OTB Lender, Pappas provided $10 million in debtor-in-possession financing, allowing On The Border to continue operations during bankruptcy and positioning Pappas as the stalking horse bidder. The acquisition, pending court approval, will add approximately 60 On The Border locations to Pappas' portfolio, expanding its presence nationally and enhancing its footprint in the Tex-Mex category. Pappas plans to strengthen and modernize On The Border by improving its menu, operations, and guest experience while honoring its legacy and value-driven approach, which complements Pappasito’s Cantina. The deal exemplifies how strategic buyers can leverage distressed assets and DIP financing to navigate bankruptcy sales and grow their businesses. On The Border had previously closed 40 underperforming locations and faced challenges including rising operational costs, staffing shortages, and creditor pressures.