FAT Brands and Twin Hospitality file for Ch. 11 bankruptcy

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FAT Brands and its affiliates, including Twin Hospitality, person filed for Ch. 11 bankruptcy successful the Southern District of Texas, citing the mounting “liabilities and liquidity situation” of the companies. 

The bankruptcy filing — estimating some liabilities and assets successful the scope of $1 to $10 cardinal — requests associated medication of each FAT Brands affiliates. This includes the antecedently spun-off Twin Hospitality, and each of the companies nether the FAT Brands umbrella, including Fazoli’s, Round Table Pizza, Johnny Rockets, Smokey Bones, institution flagship marque Fatburger, and Fog Cutter Capital, which was a controlling shareholder of the group. 

According to the filing, FAT Brands sought “strategic alternatives, including restructuring options” and determined that filing for bankruptcy extortion was successful the champion involvement of institution stakeholders.

The bankruptcy filing comes conscionable a fewer days aft the company’s largest bondholder, Investor 352 Fund, sued FAT Brands for $109 cardinal and promised Class B Common banal tied to ownership of Twin Peaks, arsenic it was issued by Twin Hospitality. 

Additionally, past November, it came to airy that FAT Brands owed $1.26 cardinal to debtors, which was declared instantly owed by indenture trustee, UMB Bank. At the time, the institution said it did not person the liquidity to wage backmost those loans and warned that bankruptcy was possible. Earlier this period astatine the ICR league successful Orlando, CEO Andy Wiederhorn claimed that the indebtedness is not guaranteed by the genitor institution arsenic a whole, and that helium has been successful speech with bondholders to restructure the debt. Wiederhorn besides suggested that respective of FAT Brands’ larger marque acquisition moves — including the company’s acquisition spree successful 2022 and the spinoff of Twin Peaks last twelvemonth — were portion of a broader strategy to little the outgo of its mounting debt.  

This strategy deed a roadblock during the three-year national criminal investigation into Wiederhorn for fraud and wealth laundering, which helium has described arsenic a “gigantic discarded of $75 million.” The investigation, which ended past July in his favor, further strained FAT Brands’ fiscal resources and forced the institution to research different options.

In a missive to franchisees viewed by Nation’s Restaurant News, Wiederhorn said the institution volition usage the bankruptcy process to “optimize our superior structure, trim indebtedness obligations, and heighten our fiscal flexibility to enactment aboriginal growth” and that royalties and advertizing payments volition proceed to beryllium collected and paid out.