Dive Brief:
- Fat Brands, which is in the middle of Chapter 11 bankruptcy proceedings, has sought approval from the court to market and “sell all, substantially all, or any portion of their assets or brands,” according to a March 12 court filing.
- The filing set an April 3 deadline for interested parties to submit a non-binding indication of interest.
- The company is continuing mediation related to potential debtor-in-possession financing, about which it is “optimistic.” Fat believes it will be able to submit a debtor-in-possession financing plan for court approval in the coming days.
Dive Insight:
Fat’s bankruptcy process has been fraught with setbacks. . A group of creditors wanted to suspend Andy Wiederhorn from serving as CEO after a sale of Twin Hospitality stock —- which began before the bankruptcy — because it was completed after the petition date without court approval.
One of Fat’s creditors also sued Fat Brands over its proposed use of management fees and other cash to fund operations during the bankruptcy, saying that money was owed to the creditor and couldn’t be used.
Regarding the sale process, the latest court filing said that Wiederhorn will not be allowed to participate in evaluations of any bids including any he submits himself, communicate with bidders except with regards to bids he submits, receive any non-public information related to the evaluation of bids, or advise the debtors on any bids or any aspect of the sales process, except at the request of the special committee.
The sales process will be an open auction that will allow all potential bidding parties ample time to perform due diligence and acquire any additional information to submit a timely bid.
“The Debtors believe the Bidding Procedures … are fair and appropriate and will enable the Debtors to maximize value while providing parties in interest with a level playing field with respect to negotiations for the purchase of the Assets,” the filing stated.
Fat Brands filed for Chapter 11 at the end of January after accruing over $1 billion in debt over the past few years after acquiring various brands, including Round Table Pizza, Fazoli’s and Johnny Rockets, to build its platform. In 2025, Fat Brands spun off Twin Peaks and Smokey Bones under Twin Hospitality in an initial public offering intended to help pay down its debt.
But ongoing macroeconomic challenges, including tariffs and inflationary pressures, hurt Fat’s cash flow, making it difficult for the company to pay off its debt. Ongoing litigation, as well as a now mothballed investigation by the Department of Justice over alleged fraud by Wiederhorn, only added to the chain’s costs.
A sales process is fairly common during Chapter 11 proceedings, and several bankrupt chains have recently emerged from bankruptcy with new owners, including Uncle Julio’s, Hooter’s, Bar Louie and On the Border.
