Dive Brief:
- A group of Fat Brands creditors holding about $990 million of the company’s outstanding debt is asking a court to temporarily suspend CEO Andy Wiederhorn, court records show.
- The creditors allege that Wiederhorn directed a major sale of Twin Peaks stock after the companies’ Chapter 11 bankruptcy filing without notifying bondholders or seeking prior court approval.
- A bankruptcy court in Texas will hold a hearing on the bondholders’ motion to oust Wiederhorn on Feb. 10.
Dive Insight:
On Jan. 30, Twin Hospitality sold 9 million shares to a company called White Lion Capital for about $3.1 million, Fat disclosed in a Feb. 4 court filing. White Lion had previously purchased over 1 million shares in Twin Hospitality in lae 2025.
The group of creditors allege that the companies should have asked the court for permission prior to the Jan. 30 sale.
“Whatever facts unfold (including the Debtors’ request for post-hoc approval) will not change that this was not an ordinary course transaction and therefore impermissible without this Court’s prior consent,” the group’s filing reads.
The group is asking the court to remove Wiederhorn as CEO while the court adjudicates a motion to appoint a Chapter 11 trustee for the companies.
“There could be no protection for the estates or creditors while Andrew Wiederhorn and his family retained total control over the Debtors,” the group claims.
Fat did not immediately respond to a request for comment on the sale or the group’s filing.
Wiederhorn’s control of Fat Brands has been contentious for a while. The Securities and Exchange Commission and U.S. Department of Justice began investigating Wiederhorn in 2022 over an allegedly fraudulent loan scheme to transfer money from Fat Brands to Fog Cutter Capital, a holding company founded by Wiederhorn.
Wiederhorn stepped down as CEO in 2023, but the Wiederhorn family retained — and consolidated — control of the company’s board. Wiederhorn returned as CEO last year after the DOJ dropped its charges against him.
The group of bondholders claimed Wiederhorn might be positioning himself as a potential buyer for Fat Brands post-Chapter 11.
“He is certainly free to bid. But he cannot use his control over the Company to drive down the price or to manipulate the process to gain an unfair advantage for his own benefit,” the group said.
The lenders claimed that Wiederhorn’s “unrestrained power” had damaged Fat Brands and was an obstacle to resolving the bankruptcy. The filing also claims a special committee possesses no meaningful power over Wiederhorn.
“These cases cannot meaningfully progress with Mr. Wiederhorn at the helm,” the filing said. “The Special Committee does not have the authority to curtail Mr. Wiederhorn’s persistent misconduct, conduct that siphoned millions in value away from the Company pre-petition and which is now continuing post-petition.”
