{"id":208304,"date":"2026-03-17T14:01:08","date_gmt":"2026-03-17T14:01:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-tx\/208304\/"},"modified":"2026-03-17T14:01:08","modified_gmt":"2026-03-17T14:01:08","slug":"current-investors-lose-all-value-in-abuelos-proposed-bankruptcy-plan-but-can-purchase-priority-stock-later","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-tx\/208304\/","title":{"rendered":"Current investors lose all value in Abuelo\u2019s proposed bankruptcy plan but can purchase priority stock later"},"content":{"rendered":"

Abuelo\u2019s filed a proposed reorganization plan in bankruptcy court putting new board leadership and ownership in place. If approved, it also wipes out the value previous owners had.<\/p>\n

The plan also:<\/p>\n

Restructures roughly $8 million of loans (all from the same bank) into a single 10-year note at 7 percent interest<\/p>\n

Pays back secured creditors (or gives them options for recovering their full value)<\/p>\n

Pays back only a portion to unsecured creditors<\/p>\n

Gives Abuelo\u2019s the right to keep or reject existing contracts<\/p>\n

The plan still needs final approval after creditors get a chance to review the plan and vote. The exact timing was not yet listed in court records, but Bankruptcy Judge Edward Morris in Fort Worth previously gave Abuelo\u2019s the exclusive right to present a plan until April 30 \u2013 meaning no one else can solicit votes for an alternative or competing plan until then.<\/p>\n

Abuelo\u2019s, a full-service casual dining restaurant chain based in Lubbock, filed for bankruptcy in September with a little more than $31 million in assets and just less than $31 million in liabilities. The chain continues to operate during the bankruptcy.<\/p>\n

The company operated 16 restaurants nationwide when the bankruptcy was first filed, court records said. At one point, Abuelo\u2019s had as many as 40 locations.<\/p>\n

LubbockLights.com covered the closure of three locations after Abuelo\u2019s filed for bankruptcy. The website as of Monday listed 13 locations in six states.<\/p>\n

In the time since Abuelo\u2019s filed for bankruptcy, the company reported $2.5 million in profit (operating income). Sales have been running above $4 million per month, for example $4.22 million in January. The monthly profit in January was more than $219,000.<\/p>\n

Ownership, leadership<\/p>\n

The bankruptcy plan called for current investors in FCI Holdings (Abuelo\u2019s parent company) to lose the value of their investment. But they get the right to participate in a future equity offering.<\/p>\n

\u201cHolders of Interests in FCIH shall receive nothing under this plan on account of their existing interests in FCIH and such interests shall be cancelled on the effective date,\u201d the proposed plan said.<\/p>\n

Bankruptcy law requires creditors to be paid first before shareholders, according to Investopedia<\/a>. It\u2019s called the absolute priority rule. <\/p>\n

The current shareholders of FCIH get the exclusive right to purchase \u201csuper voting preferred\u201d or \u201cpay-in-kind\u201d stock.<\/p>\n

The super voting stocks get 120,000 votes per share as compared with common stock of 1 vote per share. The pay-in-kind stocks get no voting rights, but get dividends.<\/p>\n

Details on the purchase price will be filed in the court record in the future. But anyone agreeing to buy super voting stock must cover $100,000 per share if Abuelo\u2019s cannot pay the $8 million bank loan that we described earlier.<\/p>\n

David Sharbutt and G. Randall Andrews put up a $1.5 million loan to get Abuelo\u2019s through the bankruptcy. Under the plan, the money will not be paid back in cash but instead become equity for the two men.<\/p>\n

Read it here: Plan of Reorganization<\/a><\/p>\n

The first $1 million of their loan will become 50 shares of \u201csuper voting\u201d preferred stock. The remaining $500,000 of their loan becomes \u201cpay-in-kind\u201d stock.<\/p>\n

Sharbutt and Andrews will be the initial new directors of FCIH if the plan goes through. Other directors will be added later \u201cin accordance with the FCIH bylaws.\u201d FCIH managers and officers will be chosen after that.<\/p>\n

\n\tRelated\n<\/p>\n

\"\"<\/a><\/p>\n

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