Chapter 7 Bankruptcy puts Texas Class Action Lawsuit on Hold

: Reese Baker & Associates

  Filed under: Chapter 7

The Ruby Tequila’s Mexican restaurant is a local Houston Texas based chain serving casual Tex-Mex cuisine. The company, owned by Fired Up Holdings ran into legal trouble in July of this year when a group of employees began complaining about not receiving a paycheck. By September, 63 of the former Ruby Tequila’s employees had filed a joint class action lawsuit in an effort to recover back wages from their previous employer, but now a Chapter 7 bankruptcy is putting a hold on the lawsuit.

The Tex-Mex eatery was only owned by Fired Up holdings Co. for two months before its abrupt closing. When the restaurant’s doors were closed in July, several employees claimed that they lost their homes, as well as, were barred from collecting unemployment benefits. This week, the parties in the lawsuit, were informed that a Chapter 7 bankruptcy, filed by a business partner at Fired Up, which allows for liquidation of the debtor’s nonexempt property, must go through before the class action lawsuit to proceed. Some of the assets listed in bankruptcy filing papers were attributed to the holding company.

The class-action lawsuit claims that restaurant ownership violated the Texas Worker Adjustment and Retraining Notification Act, and lists not only business partners at Fired Up Holdings Co., but also the previous Dallas-based investment group Chalak Mitras which sold the four-restaurant chain to Fired Up Holdings. The Texas bankruptcy laws will delay the civil case for at least 21 days, while the Chapter 7 liquidation takes place in an effort to repay the business partners’ claimants. While not all lawsuits can be put on hold by the automatic stay afforded in bankruptcy, it can stop any legal actions such as civil debt collection actions.