FAT Brands and Twin Hospitality file for Ch. 11 Bankruptcy

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

The bankruptcy filing — estimating both liabilities and assets in the range of $1 to $10 billion — requests joint administration of all FAT Brands affiliates. This includes the previously spun-off Twin Hospitality, and each of the companies under the FAT Brands umbrella, including Fazoli’s, Round Table Pizza, Johnny Rockets, Smokey Bones, company flagship brand 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 protection was in the best interest of company stakeholders.

The bankruptcy filing comes just a few days after the company’s largest bondholder, Investor 352 Fund, sued FAT Brands for $109 million and promised Class B Common stock tied to ownership of Twin Peaks, as it was issued by Twin Hospitality.

Additionally, last November, it came to light that FAT Brands owed $1.26 billion to debtors, which was declared immediately due by indenture trustee, UMB Bank. At the time, the company said it did not have the liquidity to pay back those loans and warned that bankruptcy was possible. Earlier this month at the ICR conference in Orlando, CEO Andy Wiederhorn claimed that the debt is not guaranteed by the parent company as a whole, and that he has been in talk with bondholders to restructure the debt. Wiederhorn also suggested that several of FAT Brands’ larger brand acquisition moves — including the company’s acquisition spree in 2022 and the spinoff of Twin Peaks last year — were part of a broader strategy to lower the cost of its mounting debt.

This strategy hit a roadblock during the three-year federal criminal investigation into Wiederhorn for fraud and money laundering, which he has described as a “gigantic waste of $75 million.” The investigation, which ended last July in his favor, further strained FAT Brands’ financial resources and forced the company to explore other options.

In a letter to franchisees viewed by Nation’s Restaurant News, Wiederhorn said the company will use the bankruptcy process to “optimize our capital structure, reduce debt obligations, and enhance our financial flexibility to support future growth” and that royalties and advertising payments will continue to be collected and paid out. 

FAT Brands has indicated per the bankruptcy filing that day-to-day operations of each of the brands will continue as usual during the reorganization process.

Contact Joanna at joanna.fantozzi@informa.com.