Owner of iconic pizza and burger chains nears Chapter 11 bankruptcy
When companies file for bankruptcy, it’s usually not because cash flow isn’t positive.
Bankruptcies can occur because a company is unable to generate the cash needed to pay its debt. In most cases, if you eliminate that debt the business itself will actually succeed.
That’s the claim FAT Brands CEO Andy Wiederhorn made at the ICR conference in Orlando on January 12.
“We are discussing with our bondholders the issue of restructuring this debt from 18 months to 2 years,” Wiederhorn said. Country’s Restaurant News. “It hasn’t been a very constructive negotiation… We’re looking at ways to reduce the debt and make this feasible. I wish I could say this will move quickly and be resolved, but it may take a few rounds.”
The company warned late last year it might need to apply Chapter 11 Bankruptcy after a major lender sought his rating. Wiederhorn’s comments made clear that the situation is more complex than it appears on the surface.
FAT Brands owns several well-known restaurant brands, including Johnny Rockets, Ponderosa Steakhouse, Great American Cookie and the Twin Peaks restaurant concept, which is owned by a subsidiary.
The company shared the details of its latest financial problem in a meeting. 10-K filing with the SEC.
“On November 25, 2025, FAT Brands Inc., a subsidiary of FAT Brands Inc., received an acceleration notice (“Acceleration Notice”) from UMB Bank, National Association, as trustee pursuant to the Basic Indenture dated July 10, 2023, between FB Resid and UMB, with respect to fixed-rate secured notes issued by and between FB Resid. 9.2, acting under the direction of the Control Class Representative under the FB Resid Note, expedites and declares that the outstanding principal amount of the FB Resid Notes is immediately due and payable,” the company wrote.
For practical purposes, the application stated that UMB sent Fat Brands a “Notice of Event of Default” with respect to the FB Resident Note and that “an Event of Default has occurred pursuant to Section 9.2 of the FB Resident Note.” The total principal amount outstanding under the FB Resident Notes was stated to be $158.9 million, or $110.0 million net of the FB Resident Notes.
Similar notices were sent to four other subsidiaries of FAT Brands.
FAT Brands has a complex financial structure.
“While a trustee announced that $1.26 billion of FAT Brands’ debt was past due, Wiederhorn clarified Tuesday that the debt as a whole was not guaranteed by the parent company. Instead, the total liability was spread across five companies. securitization “The trusts involve multiple layers of investors and are linked to individual brands,” NRN said.
This means he could theoretically file for Chapter 11 bankruptcy for some parts of the business, but not for all of it.
Who was Wiederhorn? Indicted by the US government on money laundering chargesbut these accusations were denied, according to NRN, which explained that “the debt restructuring process was complicated by the involvement of approximately 25 different investors or bondholders who could not agree on a single solution.”
He claimed that the company was in “good shape” with $60 million in debt, despite $1.26 billion in debt. free cash flow.
“We need a restructuring of the debt pile at an affordable level,” Wiederhorn said. “I think this is a conclusion that noteholders should come to sooner rather than later.”
fatburger: Signature burger chain and founding brand of FAT Brands
Johnny Rockets: Classic diner style burger and shake restaurant
Height Burger: Organic/better burger concept
Fazoli’s: Italian quick service restaurant chain
Round Table Pizza: Pizza chain with traditional and delivery formats
Great American Cookies: Cookies and desserts franchise
FAT Brands owns the Johnny Rockets burger chain.PV Productions/Shutterstock” loading=”lazy” height=”540″ width=”960″ class=”yf-lglytj loader”/>
FAT Brands owns the Johnny Rockets burger chain.PV Productions/Shutterstock
“FAT Brands has potential due to revenue growth and strategic initiatives such as the Twin Hospitality subsidiary. However, highly leveraged financial instability, permanent losses and negative cash flows are significant concerns. The stock’s technical indicators show neutral momentum and valuation metrics are as follows: dividend yield attractive, negative P/E ratio “highlights underlying risks” Type Rankings reported.
In 30 years of tracking retail, restaurants, and the stock market, I have seen countless publicly traded brands destroy shareholder equity through Chapter 11 bankruptcy filings.
More Bankruptcies:
“A company declares bankruptcy because it owes more than it can pay. To extricate itself from this, it works with banks and other creditors to create what can be thought of as a new company that doesn’t have as much debt. Almost always, this is a company in which existing shareholders do not own shares,” editor Chris Stuttard BankruptcyData.com told TheStreet.
“Our experience shows that you get very little return on equity following bankruptcy,” he added.
“We are implementing various strategic initiatives to strengthen our country” balance. Our dividend pause will remain in effect and our annual cash flow will be maintained by $35-40 million. “We are actively negotiating with our shareholders on debt restructuring,” he said.
Total revenue decreased 2.3% to $140.0 million compared to $143.4 million in the third quarter of fiscal 2024.
Systemwide sales decreased 5.5%.
Systemwide same-store sales decreased 3.5%. Thirteen new stores opened in the third quarter of fiscal 2025.
Net loss was $58.2 million, or $3.39 per diluted share, compared to $44.8 million, or $2.74 per diluted share, in the third quarter of fiscal 2024.
Related: Forget Red Lobster, another seafood chain has closed 135 restaurants
