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Tex-Mex Institution Trudy’s Filed for Bankruptcy Protection So It Can Pay Employees

Only two of the four restaurants are open right now in order to make a dent in the $4M debt

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A meal at Trudy’s
A meal at Trudy’s
Erin Russell is associate editor of Eater Austin, a native Austinite, and a big fan of carbs.

Amid rumblings of angry employees and debts owed, Trudy’s, a Tex-Mex institution since 1977, has filed for Chapter 11 bankruptcy protection. Of its restaurants, Trudy’s South Star on Little Texas Lane and South Congress Cafe remain operational for now.

Trudy’s on Burnet Road has been listed as temporarily closed on Yelp, expecting to reopen on Monday, March 30. The Trudy’s Texas Star near campus has been closed since November due to a fire, but is supposed to reopen on Wednesday, February 12.

According to the filing, Trudy’s money problems began in 2011 with the opening of the massive Trudy’s Four Star, which lost a million dollars a year until it closed in 2019. The company became delinquent on its taxes and debts to suppliers, and the final straw came when the Internal Revenue Service froze its credit card receipts.

Trudy’s is seeking relief to pay its 275 employees so it can continue to operate. The Chapter 11 filing will stop debt collection activities and releases the IRS levy.

The filing reveals the company’s debts ranged from a little over $1 million to restaurant supply company Sysco, to around $28,000 owed to Twin Liquors (which explains reports that the restaurant was not serving alcoholic drinks). The total amount of debt on the filing is around $4M, although Steve Sather, the lawyer representing Trudy’s on the case, points out that the number is “squishy” as “Trudy’s guaranteed debts on the real estate owned by a sister company so that inflates the number.”

Trudy’s is owned by Gary Truesdell, but due to Gary’s health problems, his son Stephen Truesdell is overseeing the reorganization (however, Stephen has a full-time job outside of Trudy’s).

The land of Trudy’s Four Points, Trudy’s South Star, and Trudy’s Texas Star is all owned by Gary Truesdell’s company Nofalia Inc. The Four Points lot is currently on the market for $6.7 million, and may consider offers on the other properties. Sather tells Eater there is also potential interest in selling South Congress Cafe.

The bankruptcy filing was made yesterday in the Western District of Texas court by Sather, and a hearing is scheduled for Friday, January 24.

January 31: This article has been updated to reflect the opening statuses for several Trudy’s restaurants.

Trudy's Texas Star

409 West 30th Street, , TX 78705 (512) 477-2935 Visit Website

Trudy's North Star

8820 Burnet Road, , TX 78757 (512) 454-1474 Visit Website

Trudy's South Star

901 Little Texas Lane, , TX 78745 (512) 326-9899 Visit Website