The parent company of popular restaurant chains across the country faces financial woes with more than $1.3 billion in debt amid legal battles.
FAT Brands Inc., the parent company of 18 global restaurant chains, filed for Chapter 11 bankruptcy protection on Monday, as it struggles to manage a massive debt load and a severe shortage of unrestricted cash.
The filing, submitted in the U.S. Bankruptcy Court for the Southern District of Texas, includes affiliates such as Twin Hospitality and comes after mounting pressure from creditors and a looming delisting notice from the Nasdaq Stock Exchange, according to Franchise Times and Restaurant Dive.
The restaurant giant, which oversees more than 2,200 locations worldwide, reported assets and liabilities both ranging between $1 billion and $10 billion.
Its portfolio includes household names such as Fatburger, Fazoli’s, Johnny Rockets, Twin Peaks, Smokey Bones, Round Table Pizza and Marble Slab Creamery.
Chief Restructuring Officer John DiDonato stated the bankruptcy was necessary because current cash flow cannot sustain operations or debt service, noting that as of Jan. 23, the company had only $2.1 million in unrestricted cash, according to Restaurant Dive.
“Our dynamic portfolio of brands has demonstrated tremendous resilience in a challenging restaurant operating environment over the last few years. We are well positioned for long-term profitability and growth,” said Andy Wiederhorn, CEO of FAT Brands in a press release.
“The chapter 11 process will provide us with the opportunity to strengthen our capital structure to support our concepts and ensure they remain at the forefront of their sectors. We plan to use this process to connect with key stakeholders around a value-maximizing plan and will act prudently to remain steadfast in upholding and protecting stakeholder interests.”
Beyond its debt obligations, FAT Brands is fighting multiple legal battles.
Just days before the bankruptcy filing, Investor 352 Fund sued the company for $109 million regarding issues tied to Twin Peaks stock.
The company has also spent roughly $85.5 million on various class-action and derivative lawsuits since 2021, though the Chapter 11 filing will effectively halt these proceedings, according to Nation’s Restaurant News and Restaurant Dive.
Nasdaq has also threatened to delist FAT Brands because its stock price has remained below $1 for an extended period.
The company has until July 7 to regain compliance, which requires the stock to trade above $1 for 10 consecutive days while maintaining a market value of more than $35 million, according to Restaurant Business.
