Bankruptcy Judge OKs Irvine Firm’s Merger Plan : Restaurants: Foodmaker and two partners will acquire Restaurant Enterprises Group in a recapitalization.

Clearing the way for what would be the largest coast-to-coast chain of sit-down Mexican-style restaurants, a bankruptcy judge in Delaware on Friday approved Restaurant Enterprises Group Inc.’s reorganization plan.

In a complicated recapitalization to be completed later this month, Foodmaker Inc. in San Diego and two investment partners will acquire Irvine-based REG, which operates the El Torito Mexican restaurant chain and the Carrows and Coco’s chains. REG, in turn, will acquire Foodmaker’s 237 Chi-Chi’s Mexican-style restaurants, most of which are in the East.

REG, which will be renamed Family Restaurants Inc., will end up with 682 full-service family and Mexican restaurants in 34 states.

“Everything went according to schedule,” REG President Norm Habermann said Friday. “We had the plan confirmed as expected, and we hope to have the final recapitalization plan done by the latter part of the month.”

REG intends to sell about $400 million in notes to retire old debt and to pay for the Chi-Chi’s acquisition. “The market environment is pretty darned favorable for those bonds, so we think it will move forward smoothly,” Habermann said.

The recapitalization calls for substantial new capital to be invested by Apollo Advisors L.P. in New York, Green Equity Investors L.P. in Los Angeles and Foodmaker, which is also the parent company of the Jack-in-the-Box fast-food chain. REG will remain in Irvine after the recapitalization is completed, and Foodmaker President Jack Goodall will become REG’s chairman and chief executive.

REG’s reorganization is designed to restructure remnants of $737 million in debt generated by a 1980s leveraged buyout.

REG filed its bankruptcy plan on Nov. 23 after it was cleared by substantially all of its creditors and shareholders. The Chapter 11 filing was made in Wilmington, Del., where the company is incorporated.

Privately held REG reported more than $500 million in revenue for the first nine months of 1993.