Bank: S.A. Mexican food producer in dire financial straits
The San Antonio company that makes Mexican food products under the brand name Andy Garcia Foods is facing severe financial pressures, casting doubt about its future, its lender alleges in a lawsuit.
Papa Grande Gourmet Foods, which says it does business as Garcia Foods, needs $1 million “to stay viable,” according to the suit filed Tuesday by TransPecos Banks.
Garcia Foods makes barbacoa, tamales, fajitas, chorizo and other products that are sold in H-E-B, Walmart, Target, and other retailers. It also makes products for food-service companies.
In the lawsuit against Papa Grande and its principals, TransPecos accuses the company of defaulting on about $6 million in loans. Its assets, including its headquarters building at 1802 Jackson Keller, are collateral for the loans.
Saying Papa Grande either is insolvent or “in imminent danger of insolvency,” TransPecos is asking a Bexar County District Court judge to appoint a receiver to take control of the company.
TransPecos wants the receiver to operate Papa Grande, sell the company and/or its assets, or shut down the business. A hearing on the bank’s request is scheduled for Tuesday.
A call to the company was not returned Friday.
When asked about the TransPecos lawsuit, Michael Colvard, a San Antonio lawyer representing Papa Grande, said the company is contemplating filing litigation of its own. He didn’t elaborate.
Colvard’s specializes in bankruptcy law, but he said no decision has been made regarding whether the company would file for bankruptcy.
Cleveland Burke, an Austin lawyer representing TransPecos, said bank officials had no comment.
Garcia Foods is a familyowned business that has been in operation about six decades.
Andrew Garcia was working in a San Antonio meat plant in the late 1950s when he bought a small barbarcoa business for $15. He and his wife, Dilia, made the barbacoa on weekends in their garage — earning $30 their first weekend, the San Antonio Express-News reported in 1994.
In 2014, son Kenneth Garcia acquired Garcia Foods through his company, Papa Grande. He had taken over the day-to-day operations of Garcia Foods in 1999.
TransPecos, though, alleges Papa Grande breached the loan agreements by allowing Garcia Foods to occupy real estate without the bank’s consent.
It’s not clear what has led to the dire financial conditions that TransPecos alleges.
Papa Grande owes about $2.6 million to suppliers or vendors. That includes some $1.5 million in bills considered more than four months old, the bank’s lawsuit says. The company is owed less than $539,000 from customers.
“The bank has regularly been forced to return checks issued by Papa Grande for insufficient funds,” TransPecos says. The bank also says it had to pay about $87,000 in property taxes for the defendants.
In addition, TransPecos says the business has not been able to obtain the $1 million needed to survive.
Kenneth Garcia and his wife, Hilda, are identified as guarantors on the bank loans.