Monterey House files Chapter 11; bad investments blamed

Monterey House files Chapter 11; bad investments blamed

HOUSTON -- Monterey House Inc., operator of 65 moderately priced Mexican dinnerhouses located mostly in Texas and Oklahoma, has filed for protection under Chapter 11 of the Federal Bankruptcy Code.

But officials of the privately held company maintained that restaurant operations remain profitable, citing illfated energy and commercial real estate investments made by a number of present and former shareholders as the cause for the action.

According to Monterey House financial vice president Elizabeth Vincent, the bankruptcy action was sought after negotiations over a debt restructuring plan with a group of local banks failed as a result of dissension by one of the bank group's minority participants.

"The current loan agreement requires 100% agreement among the participating banks," Vincent said. "So we filed for Chapter 11 to protect assets while we negotiate a financial restructuring plan with lenders and reorganize the operations of Monterey House Inc."

Monterey House chairman and co-founder David Garza Jr. added that "this Chapter 11 filing is a temporary protective measure and in no way affects our restaurant and catering operations.

"We have been in business since 1954 and are continuing today with our extensive remodeling program for all Monterey House restaurant locations. Our food-related operations are quite healthy, and we anticipate a 3%-to-5% increase in restaurant and food-related sales in 1986. In fact, our overall restaurant operations have continued to be profitable even throughout these difficult economic times."

Total 1985 sales for Monterey House restaurants and the company's wholesale Food Service division exceeded $50 million, according to estimates, with average store volumes running about $700,000 annually.

Also filing for protection under Chapter 11 were eight affiliate companies and three of Monterey House's top executives, including Garza, president George H. Michael and executive vice president Carl F. Vincent.

Affiliate companies filing for bankruptcy protection included Monterey House Inc., Monterey House Franchise Corp., Monterey House Operating Cos., Monterey House USA Inc., Monterey No. 16, Monterey House Missouri Inc., Garza/Michael Rent Account Ltd., Monterey Special Ltd., and Monterey Special II.

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