FAT Brands – parent company of Fazoli’s, Round Table Pizza, and Fatburger — may “seek to reorganize through a bankruptcy proceeding” after receiving notices of acceleration on the company’s debt. According to a recent 8-K filing with the SEC, lender UMB Bank declared roughly $1.26 billion in securitized debt immediately due.
The company had previously received default notices after failing to make scheduled payments on Oct. 27 due to insufficient funds in its collection accounts. The filing states that FAT Brands and its financing subsidiaries “do not currently have amounts on hand” to pay the accelerated principal and interest. The company warned that the acceleration — or a potential foreclosure on the collateral — could materially harm FAT Brands’ business, financial condition, and liquidity, possibly leading to bankruptcy.
The collateral behind the securitization includes royalty streams and assets tied to the company’s portfolio of brands.
For years, FAT Brands has financed its growth and paid down debt largely through brand acquisitions, including Johnny Rockets in 2020, Global Franchise Group, Twin Peaks, Fazoli’s and Native Grill & Wings in 2021, Smokey Bones in 2023, and the subsequent spin-off of Twin Peaks in January of this year.
“We are in active, constructive discussions with bondholders to prudently reshape parts of our balance sheet,” FAT Brands CEO Andy Wiederhorn said in an internal memo to franchisees viewed by Nation’s Restaurant News. “These negotiations are part of a broader effort to strengthen the company financially so we can keep investing behind our brands, accelerate development, and support your business for the long term.”
The memo emphasized that “operations remain business as usual” and that franchisees will continue to receive leadership, marketing, supply chain, and technology support.
Wiederhorn returned as CEO in September more than two years after stepping down as part of an ongoing federal investigation into fraud and tax evasion allegations. This past July, the U.S. Department of Justice dropped all criminal charges against Wiederhorn, though civil charges brought by the SEC against him are still pending.
Last month, FAT Brands and the company’s shareholders proposed a $10 million joint settlement of two lawsuits from stockholders that accused the company’s CEO Andy Wiederhorn and his affiliates (Fog Cutter Capital Group and Fog Cutter Holdings) of “self-dealing” and “misuse of funds.”
Contact Joanna at [email protected]