FAT Brands - Chapter 11 Case Summary

Business Description

FAT Brands Inc. ("FAT Brands"), Twin Hospitality Group Inc. ("Twin Hospitality"), and their debtor affiliates (collectively, the "Debtors") comprise a leading multi-brand restaurant company operating eighteen franchised or wholly owned restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli's, Twin Peaks, Smokey Bones, Great American Cookies, Hot Dog on a Stick, Buffalo's Cafe, Buffalo's Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean, Ponderosa Steakhouse, and Bonanza Steakhouse.

• The Debtors' operations span approximately 2,200 locations (including both company-owned and franchised restaurants) open or under construction, making them one of the largest restaurant companies in the United States by number of locations.
• The Debtors' brands offer a wide variety of culinary experiences, ranging from pasta to pizza, wings, and burgers, and their extensive portfolio enables them to pair complementary restaurants at the same location to capitalize on synergies and fuel growth.

As of the Petition Date, the Debtors directly employ approximately 7,500 individuals, over 1,600 of whom are full-time employees. An additional approximately 45,000 store-level employees are employed by the Debtors' franchisees across the world.

• The franchise system generated approximately $86.3 million in royalties and $5.7 million in franchise fees in 2025.
• The Company-Owned Restaurants generated approximately $389.4 million of revenue in 2025.
• The Atlanta Factory, a manufacturing facility supplying raw cookie dough and dry pretzel mix, generated approximately $39.4 million of revenue in 2025.

FAT Brands is a publicly traded company, with its Class A Common Stock listed under the symbol "FAT" on Nasdaq and its Class B Common Stock listed under the symbol "FATBB." Twin Hospitality's Class A Common Stock is traded under the symbol "TWNP" on the Nasdaq Global Market. FAT Brands also has outstanding Series B Cumulative Preferred Stock trading under the symbol "FATBP."

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Corporate History

The origin of the Debtors' restaurant portfolio traces back over twenty years to June 2003, when they acquired Fatburger, an iconic, all-American hamburger restaurant founded in Los Angeles in 1947. Following the sustained growth of Fatburger, the Debtors acquired Buffalo's Cafe, a wing-centric brand focused on fresh-never-frozen wings, in December 2011. In September 2013, the Debtors formed a fast casual model of Buffalo's Cafe called Buffalo's Express.

Formation and IPO

• In March 2017, the Debtors launched FAT Brands as a Delaware corporation and wholly owned subsidiary of Fog Cutter Capital Group, Inc., initially serving as a holding company for the Fatburger, Buffalo's Cafe, and Buffalo's Express brands.
• FAT Brands completed its initial public offering in October 2017, listing on Nasdaq under the symbol "FAT," with the goal of becoming a multi-brand restaurant franchising company focused on developing, marketing, and acquiring predominantly fast casual restaurant concepts.

Acquisition Timeline

Since its IPO, FAT Brands has pursued an aggressive acquisition strategy, assembling a portfolio of globally recognized restaurant brands:

• October 2017 – Ponderosa and Bonanza Steakhouses
• June 2018 – Hurricane Grill & Wings
• August 2018 – Yalla Mediterranean
• June 2019 – Elevation Burger, the world's first organic burger chain
• September 2020 – Johnny Rockets, rounding out the burger portfolio
• July 2021 – Global Franchise Group ("GFG") for $442.5 million, the company's largest acquisition to date, adding Round Table Pizza, Great American Cookies, Marble Slab Creamery, Pretzelmaker, and Hot Dog on a Stick
• October 2021 – Twin Peaks, a leading sports bar chain, establishing a new polished casual dining category within FAT Brands
• December 2021 – Native Grill & Wings and Fazoli's, closing the year with nearly $1 billion in total acquisitions
• September 2023 – Smokey Bones Bar & Fire Grill, a full-service barbecue restaurant chain

Twin Hospitality Spin-Off

• Following the acquisition of Smokey Bones, FAT Brands contributed the Smokey Bones brand to its subsidiary Twin Hospitality, which also owns the Twin Peaks brand.
• On January 29, 2025, FAT Brands distributed approximately 5% of the fully diluted shares of Twin Hospitality Class A Common Stock to FAT Brands's common shareholders, resulting in Twin Hospitality stock becoming publicly traded under the symbol "TWNP" on Nasdaq.
• Approximately 95% of the Class A Common Stock and 100% of the Class B Common Stock of Twin Hospitality remains owned by FAT Brands.

Since 2022, the Debtors have also launched multi-brand co-located concepts pairing different combinations of Fatburger, Buffalo's Express, Pretzelmaker, Hot Dog on a Stick, and Round Table Pizza. Additional multi-brand concepts include Cookies & Cream (Great American Cookies and Marble Slab Creamery) and Cookies & Pretzels (Great American Cookies and Pretzelmaker).

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Operations Overview

Franchise System

The Debtors operate primarily as a franchisor, particularly for the brands owned by the Securitization Entities managed by FAT Brands. They are party to franchise agreements with approximately 700 franchisees who operate over 1,900 franchised restaurant locations across 30 countries and 46 U.S. states, Washington D.C., and Puerto Rico.

• The franchise system generated approximately $86.3 million in royalties and $5.7 million in franchise fees in 2025.
• The Debtors' centralized management platform provides robust support services across six categories:
  • Operations, supply chain, training, and new store opening support (including real estate and construction assistance)
  • Administrative and financial services
  • Sales and marketing functions, including franchisee expansion
  • Technology support
  • Governance, risk management, and compliance support
  • Production and supply services through the Atlanta Factory
• Under the franchise agreements, franchisees are charged an upfront fee, a monthly marketing fee, and weekly/monthly royalties for an initial term, with an option to renew. Multi-location franchisees receive certain fee discounts.

Company-Owned Restaurants

For certain brands, including Fazoli's, Hot Dog on a Stick, Fatburger, Smokey Bones, and Twin Peaks, the Debtors directly own and operate over 150 restaurant locations. Revenue from the Company-Owned Restaurants comes from three major categories: food, bar, and merchandise, totaling approximately $389.4 million in 2025.

Manufacturing and Brewing Operations

• Atlanta Factory: The Debtors own and operate a 40,000-square-foot manufacturing facility in Atlanta, Georgia, that supplies raw cookie dough and dry pretzel mix to certain quick-service restaurant brands. The facility is the sole cookie dough supplier for the Great American Cookies franchise, shipping directly to franchisees at over 400 locations, and also produces products distributed to Fazoli's, Johnny Rockets, and Elevation Burger locations. The Atlanta Factory generated approximately $39.4 million of revenue in 2025 and currently operates at approximately 40% capacity, with plans to expand production into additional brand categories and third-party manufacturing contracts. The facility employs 50 individuals.
• Twin Brewery: The Debtors operate an in-house brewery in Irving, Texas, which brews all signature beer sold at Twin Peaks restaurants in Texas. The facility produces approximately 12,000 kegs per year and is licensed to brew up to 20,000 kegs per year. The Twin Brewery employs three employees.

Workforce

As of the Petition Date, the Debtors directly employ approximately 7,500 individuals, of whom approximately 700 are salaried and the remainder are hourly. The workforce is distributed as follows:

• FAT Brands Inc. corporate and related entities: 524 employees (176 salaried, 348 hourly), performing restaurant operations, business development, accounting, marketing, IT support, product design, and logistics functions. Corporate headquarters are located in Beverly Hills, California.
• Twin Peaks: 3,796 employees (228 salaried, 3,568 hourly), headquartered in Dallas, Texas.
• Smokey Bones: 1,809 employees (138 salaried, 1,671 hourly), headquartered in Plantation, Florida.
• Fazoli's Silo: 1,333 employees (166 salaried, 1,167 hourly), headquartered in Lexington, Kentucky.

In addition, the Debtors' franchisees employ approximately 45,000 individuals across over 1,900 franchised locations, of whom approximately 12,500 work at Twin Peaks and Smokey Bones restaurants and the remaining 32,500 are spread across the other brands.

Four Operating Silos

The Debtors' brands are organized into four operating silos within a whole business securitization structure:

• Royalty Silo: Bonanza Steakhouse, Buffalo's Cafe, Buffalo's Express, Elevation Burger, Fatburger, Hurricane Grill & Wings, Johnny Rockets, Ponderosa Steakhouse, and Yalla Mediterranean. Approximately 502 franchised locations with no Company-Owned Restaurants within the securitization structure. LTM adjusted EBITDA of $8.7 million through December 2025.
• GFG Silo: Great American Cookies, Marble Slab Creamery, Pretzelmaker, Round Table Pizza, and Hot Dog on a Stick. Approximately 1,175 franchised locations with no Company-Owned Restaurants, plus the Atlanta Factory. LTM adjusted EBITDA of $31.5 million through December 2025 (including approximately $15.4 million from the Atlanta Factory).
• Fazoli's Silo: Fazoli's and Native Grill & Wings. Approximately 143 franchised locations and 56 Company-Owned Restaurants with over 1,000 direct employees. LTM adjusted EBITDA of negative $0.7 million through December 2025.
• Twin Silo: Twin Peaks and Smokey Bones. Approximately 79 franchised locations and 66 Company-Owned Restaurants with over 5,600 direct employees. LTM adjusted EBITDA of $16.7 million through December 2025.

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Prepetition Funded Debt Obligations (~$1.45 Billion)

Securitization Debt

• Royalty Notes (~$212M outstanding) — Trustee: UMB Bank, N.A.; Base Indenture dated March 6, 2020; Maturity: April 25, 2051.
  • Series 2021-1 (issued April 26, 2021): Class A-2 ($97.1M at 4.75%), Class B-2 ($32.4M at 8.00%), Class M-2 ($15.0M at 9.00%)
  • Series 2022 (issued July 6, 2022): Class A-2 ($42.7M at 4.75%), Class B-2 ($14.2M at 8.00%), Class M-2 ($19.6M at 9.00%)
  • Outstanding as of Petition Date: Class A-2 (~$134M), Class B-2 (~$45M), Class M-2 (~$33M, of which ~$11M retained by FAT Brands)
  • Collateral: Substantially all assets of the Royalty Securitization Guarantors
• GFG Notes (~$445M outstanding) — Trustee: UMB Bank, N.A.; Base Indenture dated July 22, 2021; Maturity: July 25, 2051.
  • Series 2021-1 (issued July 22, 2021): Class A-2 ($209.0M at 6.00%), Class B-2 ($84.0M at 7.00%), Class M-2 ($57.0M at 9.50%)
  • Series 2022 (issued December 15, 2022): Class A-2 ($67.8M at 6.00%), Class B-2 ($20.3M at 7.00%), Class M-2 ($25.5M at 9.50%)
  • Outstanding as of Petition Date: Class A-2 (~$266M), Class B-2 (~$100M), Class M-2 (~$79M, of which ~$35M retained by FAT Brands)
  • Collateral: Substantially all assets of the GFG Securitization Guarantors
• Fazoli's Notes (~$187M outstanding) — Trustee: UMB Bank, N.A.; Base Indenture dated December 15, 2021; Maturity: July 25, 2051.
  • Issued December 15, 2021: Class A-2 ($128.8M at 6.00%), Class B-2 ($25.0M at 7.00%), Class M-2 ($40.0M at 9.00%)
  • Outstanding as of Petition Date: Class A-2 (~$124M), Class B-2 (~$24M, of which ~$8M retained by FAT Brands), Class M-2 ($0 to third parties; ~$39M retained by FAT Brands)
  • Collateral: Substantially all assets of the Fazoli's Securitization Guarantors
• Resid Notes (~$159M outstanding) — Trustee: UMB Bank, N.A.; Base Indenture dated July 10, 2023; Maturity: July 25, 2027.
  • Issued July 10, 2023: Class A-1 ($75.0M at 10.00%), Class A-2 ($75.0M at 10.00%)
  • Outstanding as of Petition Date: Class A-1 (~$80M, of which ~$26M retained by FAT Brands), Class A-2 (~$79M, of which ~$23M retained by FAT Brands)
  • Of $150M aggregate, $105.8M sold privately (net proceeds $105.3M); $44.2M issued to FAT Brands subsidiary pending sale
  • Collateral: Security interest in future Management Fees and residual amounts paid to FAT Brands by other Securitization Entities; also secured by 44,638,745 shares of Class A Common Stock of Twin Hospitality (~86% of Class A shares, ~22.5% voting control)
• Twin Notes (~$413M outstanding) — Trustee: UMB Bank, N.A.; Base Indenture dated November 21, 2024; Maturity: October 26, 2054.
  • Issued November 21, 2024: Class A-1 ($12.1M at 9.00%, super senior secured), Class A-2 ($269.3M at 9.00%, senior secured), Class B-2 ($57.6M at 10.00%, senior subordinated), Class M-2 ($77.7M at 11.00%, subordinated)
  • Outstanding as of Petition Date: Class A-1 (~$12M), Class A-2 (~$266M), Class B-2 (~$57M), Class M-2 (~$78M, of which ~$10M retained by FAT Brands)
  • Collateral: Substantially all assets of the Twin Securitization Guarantors

Non-Securitization Secured Debt

• Twin Peaks Equipment Loans (~$4M outstanding) — Lender: Amur Equipment Finance Inc.; 11 borrowing entities; loan dates between February 25, 2022 and December 17, 2024; principal amounts ranging from ~$17,871 to ~$801,252 per loan; terms of 48 to 72 months; collateral: financed equipment.
• GFG Percent Promissory Note (~$8.4M outstanding) — Borrower: FAT GFG Notes I, LLC; Lender: Cadence Group Platform, LLC; dated October 31, 2024; total borrowed: $8,560,173 at 16.90% per annum; maturity: July 25, 2026; collateral: ~$14M of retained GFG Class M-2 Notes plus substantially all assets of FAT GFG Notes I, LLC; guaranteed by FAT Brands.
• Royalty Percent Promissory Note (~$6.2M outstanding) — Borrower: FAT Royalty Notes I, LLC; Lender: Cadence Group Platform, LLC; dated April 23, 2025; total borrowed: $6,230,078 at 17.00% per annum; maturity: July 25, 2026; collateral: ~$11M of retained Royalty Class M-2 Notes plus substantially all assets of FAT Royalty Notes I, LLC; guaranteed by FAT Brands.
• Riverside Refi Loan ($18.75M outstanding) — Borrower: HDOS Acquisition, LLC; Lender: Insight Capital, LLC; dated January 20, 2026; used to satisfy prior Riverside Notes (~$20M) with Gold Cap LLC in full; collateral: substantially all assets of HDOS Acquisition, LLC (including 28 Hot Dog on a Stick company-owned restaurants); FAT Brands also pledged all membership interests in HDOS Acquisition.
• Waterfall Loan ($10M outstanding) — Borrower: FAT Brands; Lender: Waterfall Bridge Capital LLC; dated June 6, 2025; up to $10M at 13.5% per annum; maturity: June 6, 2026; collateral: 8+ million shares of Class A Common Stock in Twin Hospitality plus all proceeds, products, accessions, rents and profits.

Non-Securitization Unsecured Debt

• Elevation Note (~$2M outstanding) — Issuer: FAT Brands; Holder: Elevation Franchise Ventures, LLC; dated June 19, 2019 (issued as part of Elevation Burger acquisition); original principal ~$7,509,816 at 6.0% per annum; maturity: July 19, 2026; convertible into FAT Brands common stock at $12/share; unsecured.
• Tax Liabilities (~$5M past-due) — Certain taxing authorities have placed liens against the Debtors. Calendar year 2024 taxes paid totaled ~$25.6M (property taxes ~$110K, sales and use taxes ~$24.0M, franchise/gross receipts/income taxes ~$1.2M, regulatory assessments and miscellaneous fees ~$300K). Majority of past-due liabilities are obligations of legacy entities outside the WBS structure.
• Other General Unsecured Claims (~$104M) — Estimated as of the Petition Date; excludes intercompany claims and trade creditor claims described elsewhere; subject to ongoing review and analysis.

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Events Leading to Bankruptcy

Capital Structure and Securitization Overview

• FAT Brands' capital structure is primarily comprised of ~$1.4 billion in fixed-rate securitization notes issued by five separate special-purpose financing subsidiaries (the "Securitization Issuers"): GFG Notes, Royalty Notes, Fazoli's Notes, Twin Notes, and Resid Notes.
• Four of the five series of notes (GFG, Royalty, Fazoli's, and Twin) form whole business securitization ("WBS") structures secured by substantially all of the Debtors' material revenue-generating assets.
  • The fifth series (Resid Notes) is supported by future Management Fees payable to FAT Brands as manager of the securitization entities and ~86% of Twin Hospitality's outstanding Class A Common Stock.
• Under the WBS waterfall, Management Fees are paid ahead of debt service obligations; residual amounts, if any, may then be distributed to the Managers to fund operating expenses. In practice, however, the Management Fees covered only approximately 20% of selling, general, and administrative ("SG&A") expenses, leaving 80% uncovered — significantly below comparable WBS structures, which are typically structured to fully cover SG&A.

Economic and Industry Headwinds

• Inflationary pressures and broader economic uncertainty reduced consumer discretionary spending, shifting dining preferences toward more cost-efficient alternatives and slowing the pace of new franchise openings relative to the Debtors' projections.
• The Debtors experienced higher input costs driven by tariffs on imported products (including for the Atlanta Factory), supply chain disruptions related to the lasting effects of COVID-19 and the war in Ukraine, and elevated labor costs in a tight national food-service labor market.
• These headwinds impacted both company-owned restaurant margins and franchisee economics, further constraining the Debtors' revenue growth.

Ongoing Litigation

• In December 2021, the U.S. Attorney's Office for the Central District of California and the SEC opened investigations into FAT Brands and its CEO.
• On May 10, 2024, the DOJ indicted FAT Brands (the "DOJ Suit"); the SEC concurrently filed a complaint (the "SEC Suit").
  • The DOJ Suit was dismissed on August 7, 2025.
  • The Debtors and the SEC reached an agreement in principle to resolve the SEC Suit, subject to approval by the SEC commissioners.
• The Debtors also faced multiple class action lawsuits and derivative suits in the Delaware Court of Chancery; certain derivative suits were settled on December 17, 2025, though other litigation remains ongoing.
• Total legal costs since 2021 approached ~$85.5 million, further straining liquidity.

Capital Structure Overhang and Liquidity Crisis

• Beginning in 2023, the Debtors incurred penalty interest (1.0% on outstanding principal) and penalty amortization payments (including 2.0% amortization on the Royalty, GFG, and Fazoli's Notes, and escalating penalties on the Twin Notes) for failure to repay the Securitization Notes by their anticipated call dates. The Debtors paid over $72 million in penalty interest and penalty amortization since the end of 2022.
• With no excess cash flow remaining after debt service, the Debtors relied on a series of alternative liquidity sources:
  • Non-securitization (unsecured) debt backed by retained notes;
  • Common and preferred equity raises;
  • Underspent advertising costs (~$8.6 million redirected as liquidity); and
  • Sales of additional Securitization Notes previously retained or purchased by the Debtors.
• Each of these sources was ultimately exhausted:
  • The Debtors exhausted their capacity to incur additional debt;
  • Unfavorable market conditions for restaurant stocks precluded further equity raises;
  • The Trustees froze the Debtors' ability to sell retained Securitization Notes.
• Twin Hospitality filed a Form 1-A on September 24, 2025, for a $75 million equity offering, but the government shutdown and depreciation in Twin Hospitality's stock price rendered the offering unviable.
• With no alternative funding available, the Debtors used Retained Collections to fund payroll, consulting and legal fees, restructuring costs, and certain debt service obligations, triggering events of default and manager termination events under the Securitization Notes. The Securitization Noteholders did not exercise termination remedies prepetition.
• As of January 23, 2026, the Debtors held approximately $2.1 million in unrestricted cash and approximately $19.9 million in restricted accounts not under the Debtors' control.

Prepetition Restructuring Efforts

• Over the course of 2024, the Debtors negotiated with certain members of the WBS Ad Hoc Group to refinance the WBS for the Twin Peaks and Smokey Bones restaurants, culminating in the issuance of the Twin Notes and Twin Hospitality's planned public listing.
• In Q1 2025, the Debtors worked with WBS Ad Hoc Group members to amend the Fazoli's Base Indenture, extending the anticipated repayment date for the Fazoli's Class A-2 Notes to July 2026 and relaxing certain financial covenants in exchange for more demanding interest terms.
• The Debtors also undertook cost-reduction measures: halting common equity dividends, accruing preferred dividends, ceasing cash interest payments on preferred equity put agreements, reducing personnel headcount, and cutting corporate overhead.
• Governance enhancements included the appointment of a Chief Restructuring Officer and Deputy CRO, and the formation of a Special Committee of two independent directors to evaluate strategic alternatives.

Negotiations with Securitization Noteholders

• Since summer 2025, the Debtors engaged in discussions with the WBS Ad Hoc Group (represented by White & Case LLP and Houlihan Lokey Capital, Inc.) regarding potential transactions to address the Debtors' liquidity and capital structure.
• By fall 2025, the parties focused on a forbearance construct that would afford the Debtors time to raise equity to reduce funded debt; these discussions did not result in an agreement.
• In late 2025, the Debtors also engaged with counsel to the Resid Noteholders. Discussions resumed in the weeks preceding the Petition Date but ultimately failed to produce a prepetition restructuring agreement.
• The WBS Ad Hoc Group indicated that absent a chapter 11 filing, it would direct foreclosure on WBS collateral, termination of the Managers, and exercise of control over the Debtors' deposit accounts.
• An out-of-court restructuring was deemed infeasible given the likely requirement of unanimous creditor approval.

Chapter 11 Filing and Path Forward

• Prior to filing, the Debtors ran a preliminary marketing process, soliciting proposals for postpetition financing from 27 potential lenders; 8 entered into NDAs and began diligence. No actionable financing proposals were received. A DIP proposal from the WBS Ad Hoc Group was reviewed but determined to be not actionable.
• The Debtors proposed a four-week cash collateral budget to fund operations on an interim basis while pursuing mediation with the WBS Ad Hoc Group and other stakeholders on an expedited timeline. A proposed stipulated Mediation Order was shared with the WBS Ad Hoc Group in advance of filing.
• The Debtors' boards of directors voted to approve the filing of the Chapter 11 Cases, with the objective of achieving a comprehensive, value-maximizing restructuring that would allow the Debtors to emerge with a sustainable capital structure.