Trudy’s Tex-Mex restaurant boosted in bankruptcy court by loan from El Arroyo owner

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Editor’s note: A previous version of this story stated Ellis Winstanley is a current partner for Star Seeds Cafe and Tavern Austin. Winstanley’s relationship with those businesses ended in 2019 and 2018, respectively.

AUSTIN (KXAN) — The Trudy’s Tex Mex restaurant chain is receiving a loan from several local investors to “allow operations to get back up to speed” after filing for Chapter 11 bankruptcy, according to the restaurant’s attorney Steve Sather.

This loan will allow for the restaurant chain to pay its employees after several missed paychecks.

The owner of El Arroyo and other restaurants offered to provide finances and consulting assistance to the Trudy’s Texas Star, Inc. with a loan, according to the bankruptcy court filing. Ellis Winstanley, part of the Rezerve Group LLC, also owns Cain & Abel’s and was a previous partner at Star Seeds Cafe and Tavern Ausitn.

A judge approved a $450K loan for the restaurant on Monday. Trudy’s will be asking for $300K more at a hearing on March 12.

“The goal is to get the operation humming so that it becomes a viable candidate for a sale,” Sather told KXAN.

Trudy’s Tex-Mex restaurant chain has three locations in Austin: Trudy’s North Star on Burnet Road, Trudy’s South Star on Little Texas Lane and South Congress Cafe.

According to previous comments from Sather, all three locations of Trudy’s were profitable, but their financial problems spiraled out of control when their Dripping Springs location shut down.

Gary Truesdell, the owner of Trudy’s, was experiencing health issues, and the chain had taken out merchant cash advance loans, which are high-interest loans for small businesses, similar to payday loans available to individuals.

The Chapter 11 filing protected the company from creditors seizing their assets.

According to the court filing, Truesdell’s son, Stephen, took over the business in December 2019. At that time, Trudy’s was “in a state of crisis.” Stephen Truesdell grew up working in the business, but has another full-time job with management responsibilities.

The Rezerve Group, LLC will receive two forms of compensation from Trudy’s. The first is a fixed compensation of $100K for 150 days of work, and the second is based on incentives from the restaurant’s performance, according to the filing.

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