Dive Brief:
- Fat Brands and Twin Hospitality filed for Chapter 11 bankruptcy protections in the U.S. Bankruptcy Court for the Southern District of Texas, the companies said in press releases on Monday.
- This move comes months after Fat’s creditors said the company’s $1.3 billion in debt was due in full, immediately. At the time, Fat said in an SEC filing that it did not have the cash on hand to pay down the loans immediately.
- Fat’s debt has grown over the past few years as it aggressively expanded its portfolio through acquisitions. It spun off Twin Peaks and Smokey Bones, its top-performing casual brands, through a separate IPO last year in the hopes of raising money to help pay down this debt.
Dive Insight:
Fat and Twin Hospitality said they will use the Chapter 11 bankruptcy process to deleverage their balance sheets, boost shareholder value and continue to grow their brands. Both companies expect to remain operational during the restructuring process, the press release said.
“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. The chapter 11 process will provide us with the opportunity to strengthen our capital structure,” Andy Wiederhorn, CEO of Fat Brands, said in a statement.
The bankruptcy is the latest in a flurry of unfortunate events to hit Fat Brands. In 2022, federal investigators placed Wiederhorn and several other executives under investigation for alleged money laundering and fraud. Weiderhorn resigned from his post in 2023, but returned in 2025 after the Department of Justice dropped all charges.
Fat began having trouble with debt repayments in October, when it defaulted on debt issued by five subsidiaries. Fat said it was in discussions with its creditors to refinance or restructure its obligations, but those negotiations did not save it from going bankrupt.
Twin Peaks’ largest bondholder, 352 Capital, sued the company last week demanding that it hand over shares of the casual chain as collateral for unpaid debt. Earlier this month, Fat received three delisting notices from the Nasdaq Stock Exchange after its stock price fell below $1 for too long, according to Restaurant Business. Shareholders and franchisees have also filed lawsuits against Fat and some of its brands in recent months.
The company has been struggling with same-store sales over the past few quarters, posting a 3.5% decline in the key metric during the third quarter. However, this was an improvement from a decline of 4.2% during the second quarter and represented its strongest quarter so far in 2025, Wiederhorn said on the company’s Q3 earnings call.
Despite such misfortune, Fat Brands has a pipeline of about 900 committed locations that are expected to open over the next five to seven years. Once these units are fully operational, Fat expects to gain $50 million to $60 million in incremental earnings, Wiederhorn said on the call.
The company has also had success with co-branding several of its concepts. In August, the chain brought a co-branded version of Round Table Pizza and Fatburger to California for the first time, with a unit in Rancho Cordova. Adding Fatburger to a Roundtable location with excess kitchen capacity roughly doubled weekly sales and transactions. Fat has about 50 of these co-branded restaurants in its pipeline, with significant potential to expand throughout California and other markets, Wiederhorn said.
