Fort Worth firm buys San Antonio food company at bankruptcy auction (12/06/19)
By Patrick Danner
The longtime family-owned San Antonio company that makes Mexican food products under the brand name Andy Garcia Foods was sold Friday at bankruptcy court auction.
Fort Worth-based Mission Consumer Capital was the high bidder with a $4.8 million offer for the assets of Papa Grande Gourmet Foods, which does business as Garcia Foods.
The company makes barbacoa, tamales, fajitas and chorizo, among other products.
The sale marks the end of 63 years of ownership by members of the Garcia family, who did not participate in the auction because they didn’t have the money.
South Texas’ Yash Properties Royal Palm was the only other bidder. The auction, presided over by Chief U.S. Bankruptcy Judge Ronald King, took about 15 minutes.
Robert “Bobby” J. McGee, Mission’s managing partner, said after the auction that his firm was “really, really excited” about the acquisition of Garcia Foods.
“It’s an iconic San Antonio brand (with) a great legacy,” McGee said. It has “a following by consumers for over 50 years, and we’re really proud to be part of San Antonio.”
During the bidding, McGee told the judge that his group had agreed to hire all of Garcia Foods’ 100 employees and spend an additional $5 million on the plant at 1802 Jackson Keller “to bring it up to code and meet OSHA (Occupational Safety and Health Administration) requirements.”
A court filing listed the plant’s value as $5.4 million.
Mission has a long history of operating and building food companies, and had been eyeing an acquisition of Garcia Foods for four years, McGee said.
Mission’s website show its investments have included: Local Live Honey, a Colorado packer of honey; Jardines Foods, a Buda-based maker of salsas and other Southwestern foods; and Private Harvest, a producer of gourmet sauces and oils.
“We really hope to build a nationwide, authentic Hispanic brand that would be headquartered here in San Antonio,” McGee said of Garcia Foods. “We see a huge need across the country for good-for-you, better-for-you choices among authentic San Antonio-type foods.”
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Mission already has named Jack Kelly to serve as CEO. He has more than 40 years in the food industry, including as president of salsa maker San Antonio Farms. TreeHouse Foods Inc. bought San Antonio Farms for $88.5 million from former Pace Foods owner and billionaire Christopher “Kit” Goldsbury in 2007.
“We’re very excited about the upside in the (ethnic food) category and bringing these terrific products to more consumers,” Kelly said.
Garcia Foods was started in 1956 by Andy Garcia. He launched the business with $15, making barbacoa with his wife on weekends in their garage.
Kenny Garcia, one of six children, joined the family business and took over day-to-day operations in 1999. A decade later, he left the business to start Papa Grande with his wife, Hilda.
In 2014, the Garcias bought Garcia Foods and merged it with Papa Grande.
Papa Grande sought bankruptcy protection in February after its lender, TransPecos Banks, moved to have a receiver appointed to take control of the business. The bank accused the company of defaulting on $6 million in loans and facing insolvency, which Kenny Garcia has disputed.
The Garcias accused the bank in a lawsuit of trying to take away their business. Their lawsuit was dismissed, but they have appealed.
Last month, the Garcias asked the bankruptcy judge to allow them to hang on to their business by paying the highest bidder at auction the amount of its bid plus $100,000. The judge denied the request, saying they could participate in the auction.
Kenny Garcia said he and three family members were fired Friday. The terminations were done by the trustee appointed by the bankruptcy court in June to run the business, McGee said. He plans to offer the Garcias a consulting role in the business.
“We’ll have to work through that, and see how they feel about that,” he said.
TransPecos had tried to force him to sell to Mission for three years, Garcia said.
“They finally got their wish,” he said of TransPecos. “Now, they think they’re Garcias. Bobby McGee is no Garcia, and Kenny Garcia is no McGee.”
McGee said his sympathies go out to the Garcias.
“The food business is much more difficult than it was 50 years ago,” McGee said. “Having experts, people with lots of experience, is crucially important.”
The bankruptcy court on Dec. 16 is scheduled to hear a reorganization plan submitted by the Garcias, but they likely face an uphill battle getting it approved given Mission’s purchase. The sale is supposed to close before the end of the month, McGee said.
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