Drowning in debt

Owner of iconic campus Tex-Mex restaurant files for bankruptcy

Owner of iconic campus Tex-Mex restaurant files for bankruptcy

Trudy's Texas Star
The owner of Trudy's and South Congress Cafe has filed for bankruptcy. Trudy's/Facebook

Weighed down by more than $5.3 million in debt — including a mountain of outstanding tax bills, loan payments, and employee back pay — the owner of Austin dining mainstays Trudy’s and South Congress Cafe filed January 22 for bankruptcy protection.

In documents filed with the U.S. Bankruptcy Court in Austin, Trudy’s Texas Star Inc. seeks to reorganize its finances under Chapter 11 of the federal bankruptcy law. The company owns three Trudy’s Tex-Mex locations and South Congress Cafe, all in Austin. The bankruptcy case also covers the now-shuttered Trudy’s location near Dripping Springs, which closed in January 2019.

“The goal is to keep the restaurants open, pay the employees, pay the creditors, and keep the loyalty of the customers,” Austin bankruptcy attorney Stephen Sather, who’s representing Austin-based Trudy’s Texas Star, tells CultureMap.

Court documents show the owner of Trudy’s and South Congress Cafe owes money to more than 200 creditors. Capital Certified Development Corp., an Austin-based lender for small businesses, is the No. 1 creditor. It’s owed more than $2.2 million, the court filing indicates.

Other major creditors and the amounts they’re owed include:

  • IRS, $1,389,376
  • Food distributor Sysco, Houston, $1,039,627 
  • Small-business lender Jiffy Capital, Brooklyn, New York, $560,194
  • American Express, $418,823
  • Small-business lender OnDeck Capital, New York City, $276,750
  • Travis County, $97,473 (taxes)
  • J Luna Produce, Houston, $60,779
  • Texas Comptroller of Public Accounts, $58,562 (taxes)
  • Blue Cross Blue Shield, Dallas, $57,682
  • Fiesta Tortilla, Austin, $50,397
  • City of Austin Utilities (Austin Energy), $36,074
  • HVAC company Chase Air, Austin, $35,000
  • Real estate investment firm MWM Fund VII, Houston, $33,107
  • Hays County, $31,773 (property taxes)
  • Twin Liquors, Austin, $28,652

Among other Central Texas creditors cited in the bankruptcy paperwork are ABC Home and Commercial Services, AlphaGraphics, Alsco Linens, Amy’s Ice Creams, Grande Communications, Hudson Meat Market, Lone Star Meats, New World Bakery, Pedernales Electric Cooperative, Segovia Produce, and Texas Coffee Traders. The amounts they’re owed weren’t mentioned.

Furthermore, a number of Trudy’s and South Congress Cafe employees were listed as creditors. The amount of pay they’re owed wasn’t cited.

Gary Truesdell owns Trudy’s and South Congress Cafe. Stephen Truesdell, his son, runs the restaurant company and signed the bankruptcy documents. Stephen Truesdell, who lives in Dripping Springs, is also listed as a creditor.

Gary Truesdell founded Trudy’s in 1977 at 409 W. 30th St., near the University of Texas campus. That location temporarily closed following a November 2019 fire. The two other Trudy’s locations are at 8820 Burnet Rd. in North Austin, which opened in 1988, and 901 Little Texas Ln. in South Austin. That restaurant moved to the Little Texas Lane site in 2007 from the Brodie Oaks Shopping Center in South Austin.

Aside from Tex-Mex breakfast, lunch, brunch, and dinner fare, Trudy’s is hailed for its potent Mexican martinis. 

The Hill Country location of Trudy’s opened in 2011 but shut down last year. As recently as December, the nearly 4.9-acre property along U.S. Highway 290 West — including the 24,576 square-foot restaurant — was on the market for $6.7 million.

South Congress Cafe has served American cuisine at 600 Congress Ave. since 2003.