Two longtime Tucson restaurants, struggling with loan payments and facing foreclosure, filed for bankruptcy protection last week to reorganize their debt.
Even with the filings, La Fuente Restaurant, 1749 N. Oracle Road, and El Parador Restaurant, 2744 E. Broadway, will remain open. Their managers ask that their customers continue supporting them.
"We've been in business 51 years and we're trying to stay open another 50 years," said Carlos Portillo, current owner of La Fuente.
Portillo's company, David Alexander LLC, filed for Chapter 11 bankruptcy protection Tuesday, listing less than $50,000 in assets and between $500,000 and $1 million in liabilities.
A Chapter 11 filing generally protects a debtor from legal action, such as a foreclosure, as it reorganizes its expenses. It doesn't mean a business is going to close its doors.
Portillo said he filed for bankruptcy protection to stop an auction on his restaurant that had been scheduled to take place last Friday. The restaurant had fallen behind on a $770,000 loan, a foreclosure notice filed in the Pima County Recorder's Office shows.
The company is about six months behind on loan payments, said Clifford Altfeld, the attorney representing the restaurant's lender, Canyon Community Bank. The lender is demanding rent payments, which so far have been going to David Alexander LLC, Altfeld said.
Portillo said he knew the bankruptcy filing was coming, and started using money that would have gone to loan payments to beef up marketing. Those payments will resume soon, he said.
El Parador, another prominent Mexican restaurant in Tucson, faces a similar situation.
It received a foreclosure notice about the same time last fall as La Fuente, public records show. The owner of El Parador, John E. Jacob Enterprises Inc., had defaulted on a $1.1 million loan, the records say. The lender on that note is HSBC Bank USA.
Loretta Carlson, a manager at El Parador, emphasized that the restaurant will stay open.
"We have gotten a tremendous amount of community support that we're thankful for," Carlson said.
John E. Jacob Enterprises filed for Chapter 11 bankruptcy protection Thurs-day, but the case was dismissed the same day by Chief Bankruptcy Judge James M. Marlar because the company wasn't represented by an attorney.
Carlson said the restaurant will likely refile with an attorney. Any filing will be a strategic reorganization, as the restaurant's management works on a new format to move forward, she said.
A third Tucson restaurant, Casa Molina, which for decades has served Mexican cuisine at 6225 E. Speedway, received a foreclosure notice within days of La Fuente and El Parador. Casa Molina had defaulted on a $450,000 loan and its auction had been scheduled for last Thursday.
Lisa Molina, a manager there, said the restaurant was able to refinance its debt in time to avoid the foreclosure sale.
Castillo, the owner of La Fuente, said that with growing competition from national chains, it's important for people to support local restaurants. To grow business, Castillo said he's planning new ways to get the word out about La Fuente, including new lunch specials and touting celebrities, such as Frank Sinatra, who've visited.
"We are a landmark in Tucson and people need to realize what they have," Portillo said.
Contact reporter Dale Quinn at dquinn@azstarnet.com or 573-4197.
