Fat Brands - Chapter 11 Plan Terms

Plan Terms

Overview

• FAT Brands Inc., Twin Hospitality Group Inc. (collectively, the “Parents”), and each of the affiliated debtors and debtors in possession (collectively, the “Debtors”) jointly propose a chapter 11 plan of liquidation (the “Plan”) for the resolution of outstanding Claims against, and Interests in, each of the Debtors.
  • The Petition Date was Jan. 26, 2026.
  • Although proposed jointly for administrative purposes, the Plan constitutes a separate Plan for each Debtor, and each Debtor is a proponent of the Plan within the meaning of section 1129 of the Bankruptcy Code.
  • The Plan provides for the grouping of all of the Debtors solely for purposes of voting, determining which Class or Classes have accepted the Plan, confirming the Plan, and the resulting treatment of all Claims and Interests and Plan Distributions.
• Pursuant to four separate Sale Orders entered by the Bankruptcy Court, the Debtors obtained authorization on May 19, 2026 to sell substantially all of their assets to several Purchasers, and the Debtors intend to liquidate their remaining assets on the terms and conditions contained in the Plan. As such, the Plan is a liquidating plan that provides for:
  • The Distribution of any proceeds from the previously approved asset sales and the liquidation of any remaining assets, as well as the Distribution of other Cash that the Debtors have on hand on the Effective Date; and
  • The creation of a Liquidation Trust and appointment of a Liquidation Trustee that will administer and liquidate certain property of the Debtors, including the Retained Causes of Action, make certain Distributions, and wind up the Debtors’ Estates and remaining business affairs.

Global Settlement

• The “Global Settlement” is the settlement among the Debtors, the Official Committee of Unsecured Creditors (the “Committee”), 352 Capital (3|5|2 Capital GP LLC, on behalf of 3|5|2 Capital ABS Master Fund LP), and the WBS Ad Hoc Group (collectively, the “Global Settlement Parties”), embodied in the settlement term sheet appended to the Global Settlement Order as Exhibit A.
  • The Committee was appointed pursuant to a Notice of Appointment filed by the U.S. Trustee on Feb. 2, 2026 [Docket No. 186]; the Committee Professionals are Paul Hastings LLP and M3 Partners, LP.
• Pursuant to section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019, and in consideration for the classification, Distributions, releases, and other benefits provided under the Plan, upon the Effective Date the provisions of the Plan shall constitute a good-faith compromise and settlement of all Claims, Interests, Causes of Action, and controversies released, settled, compromised, or otherwise resolved pursuant to the Plan.
• The Debtors, with the consent of the Committee, the WBS Ad Hoc Group, and 352 Capital, reserve the right to alter, amend, modify, revoke, or withdraw the Plan prior to it being substantially consummated, subject to section 1127 of the Bankruptcy Code and Bankruptcy Rule 3019.
  • Any consent rights provided to 352 Capital with respect to the terms of the Plan shall be limited to terms that affect the Global Settlement or 352 Capital.

Sale Transaction

• A “Sale Transaction” means any sale of the Debtors’ assets to a Purchaser pursuant to the Sale Transaction Documentation, which means any Sale Order or fully executed Asset Purchase Agreement and any documents ancillary thereto or incorporated therein by reference.
  • The Bidding Procedures Order was entered by the Bankruptcy Court on April 9, 2026 [Docket No. 595].
  • The “WBS Ad Hoc Group Credit Bid Transaction” means the acquisition by or at the direction of the DIP Lenders and the Prepetition Noteholders of the collateral securing the DIP Obligations and/or the Prepetition Secured Obligations pursuant to a Credit Bid of such obligations.
  • An “Alternative Sale” means a sale of certain assets, other than the Credit Bids, to third parties pursuant to the applicable Sale Order, the proceeds of which shall be contributed to the Liquidation Trust.
  • The “NewCos” are FBG Bid Co. and TWNPKS Bid Co., in each case formed to acquire certain assets in the Sale Transactions.

DIP Claims

• The DIP Order was entered by the Bankruptcy Court on May 19, 2026 [Docket No. 1366]. The DIP Lenders’ Advisors are White & Case LLP and Houlihan Lokey, Inc.
• All DIP Claims shall be deemed Allowed under the Plan in an amount equal to the aggregate amount of the DIP Obligations outstanding on the Effective Date, including:
  • The principal amount outstanding under the DIP Loans on such date;
  • All interest accrued and unpaid thereon through and including the Effective Date;
  • All accrued and unpaid fees, discounts, expenses, costs, and indemnification obligations payable under the DIP Documents; and
  • Any and all other DIP Obligations.
• Prior to, and as a condition of, the Effective Date, the WBS Ad Hoc Group Credit Bid Transaction shall have closed and, except as otherwise stated in Article II.C, all DIP Claims shall be deemed satisfied through that transaction, with Holders of DIP Claims receiving no other recovery or distribution on account of the DIP Claims.
• The “DIP Contributed Assets” include:
  • The proceeds from the sale of any DIP Collateral approved by the Required DIP Lenders;
  • All claims and proceeds of Avoidance Actions held by the Debtors against any party (other than Avoidance Actions sold under the Credit Bids or otherwise waived or released);
  • Claims of the Debtors against directors and officers for breach of fiduciary duties;
  • All rights and claims of the Debtors under any D&O Liability Insurance Policies and the proceeds thereof;
  • All other commercial tort claims held by the Debtors against any Person; and
  • Such other assets at entities where the Prepetition Secured Parties do not hold Prepetition Liens, including Cash and accounts receivable.
• If any of the DIP Contributed Assets are monetized pursuant to the Sale Transactions or otherwise, the cash proceeds shall be applied toward the funding of the Liquidation Trust as Liquidation Trust Assets.

The Liquidation Trust

• The Liquidation Trust will be established on the Effective Date pursuant to the Liquidation Trust Agreement for the benefit of the Liquidation Trust Beneficiaries.
  • The Liquidation Trust Agreement shall be included in the Plan Supplement and shall be in form and substance acceptable to the WBS Ad Hoc Group, the Committee, and 352 Capital.
  • The Liquidation Trust shall qualify as a “liquidating trust” for the primary purpose of liquidating and distributing the Liquidation Trust Assets in accordance with Treasury Regulations Section 301.7701-4(d), in compliance with Revenue Procedure 94-45, 1994-2 C.B. 684, and shall have no objective to continue or engage in the conduct of a trade or business and shall not be deemed a successor-in-interest of any Debtor or Estate.
• The “Liquidation Trust Funding Amount” means an aggregate amount equal to at least $1.5 million, subject to any increase in connection with the Professional Fee Surplus, to be funded pursuant to the Wind-Down Budget to the Liquidation Trust on the Effective Date and used solely to prosecute and monetize the Liquidation Trust Assets, including the initial costs of the Liquidation Trustee, or otherwise in accordance with the Wind-Down Budget.
• On the Effective Date:
  • The Liquidation Trust Agreement will become effective, and the Debtors shall be deemed to have transferred all of their rights, title, and interests in and to all of the Liquidation Trust Assets and the Liquidation Trust Funding Amount to the Liquidation Trust free and clear of all Liens, Claims, and Interests, except as otherwise provided in the Plan or the Combined Order;
  • The Liquidation Trust shall be funded with the Liquidation Trust Funding Amount; and
  • The Liquidation Trust Assets shall vest in the Liquidation Trust free and clear of all Claims, Liens, charges, other encumbrances, and interests.
• The Liquidation Trustee will be the Person selected jointly by the Committee, 352 Capital, and the WBS Ad Hoc Group, and reasonably acceptable to the Debtors; the identity of the Liquidation Trustee shall be disclosed in the Plan Supplement.
  • On the Effective Date, the authority, power, and incumbency of the persons acting as directors and officers of the Debtors shall be deemed terminated and such persons shall be deemed to have resigned, and the Liquidation Trustee shall be appointed as the sole director and sole officer of the Debtors, succeeding to the powers of the Debtors’ directors and officers.

Recovery Waterfall

• On or after the Effective Date, the Distributable Proceeds received by the Liquidation Trust shall be applied as follows and in accordance with the Liquidation Trust Agreement:
  • First, to payment or reimbursement of all Liquidation Trust Fees and Expenses not otherwise covered by the Liquidation Trust Funding Amount;
  • Second, to payment of any residual Allowed Administrative Claims and Allowed Priority Tax Claims, which shall be satisfied first from the Wind-Down Account, with any residual amounts available to the Liquidation Trust for distribution;
  • Third, until the repayment of the NewCo Funding Claims, 100% to the Class A Liquidation Trust Beneficiaries;
  • Fourth, following the repayment of the NewCo Funding Claims, in respect of the next $18.9 million of Distributable Proceeds received by the Liquidation Trust:
    • 65% to the Class A Liquidation Trust Beneficiaries;
    • 15% to the Class B Liquidation Trust Beneficiaries; and
    • 20% to the Class C Liquidation Trust Beneficiaries, distributed Pro Rata among the Class C Liquidation Trust Beneficiaries; provided that, until an aggregate of $500,000 has been paid to the Holders of Resid Priority Indemnity Claims, all amounts otherwise allocable to Class C-2 Liquidation Trust Interests shall be distributed to the Holders of Resid Priority Indemnity Claims; and provided further that, until the Class C-2A Liquidation Trust Beneficiaries receive $115,493,340.01 in the aggregate (including on account of Class B Liquidation Trust Interests held by such beneficiaries), all amounts otherwise allocable to Class C-2B and Class C-2C Liquidation Trust Interests shall be distributed to the Class C-2A Liquidation Trust Beneficiaries.
  • Fifth, following the foregoing distributions and repayments, in respect of the remaining Distributable Proceeds received by the Liquidation Trust:
    • To the Class B Liquidation Trust Beneficiaries: 15% until they have received $10,000,000 in the aggregate on account of their Class B Liquidation Trust Interests, and 0% thereafter;
    • To the Class C Liquidation Trust Beneficiaries (Pro Rata among them): 50% until the Class B Liquidation Trust Beneficiaries have received $10,000,000 in the aggregate, and 65% thereafter; subject to the provisos that, until the Class C-2A Liquidation Trust Beneficiaries receive $115,493,340.01 in the aggregate (including on account of their Class B Liquidation Trust Interests), all amounts otherwise allocable to Class C-2B and Class C-2C Liquidation Trust Interests shall be allocated to Class C-2A, and, until the Class C-2B Liquidation Trust Beneficiaries receive $51,404,459.79 in the aggregate, all amounts otherwise allocable to Class C-2C Liquidation Trust Interests shall be distributed to Class C-2B; and
    • 35% to the Class D Liquidation Trust Beneficiaries, subject to the priority of payment provisions in the Prepetition Indentures and as set forth more fully in the Liquidation Trust Agreement.
• The Liquidation Trust Interests received by the Liquidation Trust Beneficiaries under the Plan shall be in full and complete satisfaction, compromise, settlement, and release of their respective general unsecured claims and deficiency claims, as applicable, against the Debtors.
• All Allowed Administrative Claims and Allowed Priority Tax Claims shall be satisfied from the Debtors’ Cash on hand or the Wind-Down Account, and residual amounts, if any, shall be revested in the Liquidation Trust for distribution in accordance with the Plan and the Liquidation Trust Agreement.
• Notwithstanding anything to the contrary, the Liquidation Trustee shall exercise reasonable discretion with respect to the amount and timing of Distributions of Distributable Proceeds to Liquidation Trust Beneficiaries, in accordance with the above waterfall.

Wind-Down

• The “Wind-Down” is the process of winding down and dissolving the Debtors and the Non-Debtor Subsidiaries by the Liquidation Trustee, including selling, liquidating, or abandoning any remaining assets (including pursuing, prosecuting, and/or settling the Retained Causes of Action) and resolving or terminating any remaining liabilities, as set forth in the Plan, the Liquidation Trust Agreement, and the Combined Order.
• The “Funding Amount” means not less than $9.23 million — subject to any decrease in connection with the Professional Fee Surplus and any increase based on the agreed tax structure to satisfy all Specified Taxes or based on any adjustments to the Wind-Down Budget, in each case as agreed by the Global Settlement Parties — in cash funded by the NewCos and deposited into the Wind-Down Account, to be used in accordance with the Wind-Down Budget.
  • The “NewCo Funding Claims” means an amount equal to the Funding Amount, provided that the NewCo Funding Claims shall increase by 12% per annum on any unrecovered amounts.
  • Any amounts of the Trustee/Agent Holdback not expended for the payment of the DIP Agent Fees and Expenses or Prepetition Trustee Fees and Expenses for amounts invoiced after the date of entry into the Global Settlement shall be remitted to the NewCos, and the NewCo Funding Claims shall be reduced accordingly on a dollar-for-dollar basis (after taking into account the applicable interest accrued thereon).
• The “Trustee/Agent Holdback” means a holdback of $1.0 million from Cash held in the UMB Trust Accounts to cover the DIP Agent Fees and Expenses and Prepetition Trustee Fees and Expenses, in each case invoiced after the date of entry into the Global Settlement.
• The “Professional Fee Surplus” means the lesser of (i) $7.0 million and (ii) the amount, if any, by which the aggregate amount budgeted in the Wind-Down Budget for fees of the Professionals and other advisors to the Global Settlement Parties exceeds the aggregate amount of fees actually incurred by such Professionals and advisors during the period covered by the Wind-Down Budget that are allowed by the Bankruptcy Court and irrevocably paid in full.
• The Wind-Down Budget is appended to the Global Settlement Order as Exhibit B. On the Sale closing date, pursuant to the Sale Orders, the Wind-Down Account shall be funded in accordance with the terms of the Wind-Down Budget.
  • On the Effective Date, any remaining Cash held by the Debtors (other than any Cash in the Resid Trust Accounts) after making all of the disbursements contemplated by the Wind-Down Budget and completion of the Wind-Down shall be transferred to the Liquidation Trust and shall constitute Liquidation Trust Assets.

Treatment of Claims and Interests

• The Voting Classes are Classes 3, 4, 5, 6, 7, and 8.
• Each Holder of an Allowed Secured Insight Claim (Class 3), Secured Percent Claim (Class 4), or Secured Waterfall Claim (Class 5) — each an Impaired Voting Class — shall receive its Pro Rata Share of the Insight, Percent, or Waterfall Distributable Proceeds, respectively, if any.
• Resid Claims (Class 6) — consisting of the Resid Notes Claims, the Resid Trustee Expenses, and the Resid Indemnity Claims — shall be Allowed Claims in an amount not less than $168,441,962.13, consisting of:
  • $166,897,889.80 on account of principal and interest in respect of the Resid Notes Claims;
  • Not less than $350,073.35 on account of the Resid Trustee Expenses;
  • $500,000 on account of the Resid Priority Indemnity Claims (352 Capital’s Claims for fees, expenses, indemnities, and other amounts owed under the Resid Base Indenture and related documents); and
  • Not less than $693,998.98 on account of the Resid Subordinated Indemnity Claims (352 Capital’s Claims for fees, expenses, indemnities, and other amounts incurred through the Effective Date in excess of $500,000).
• The “Resid Deficiency Claims” means the Resid Claims less (i) $10,000,000 on account of the Class B Liquidation Trust Interests and (ii) $1,022,435.56 on account of Cash in the Resid Trust Accounts, and shall be Allowed Unsecured Claims in an amount not less than $157,419,526.57.
• Each Holder of an Allowed General Unsecured Claim (Class 7) shall receive its Pro Rata Share of the Class C Liquidation Trust Interests, which shall be Class C-1 Liquidation Trust Interests.
• Noteholder Deficiency Claims (Class 8) — all Noteholder Claims not satisfied pursuant to the WBS Ad Hoc Group Credit Bid Transaction, including any Claims related to or arising from the Limited Guaranties — shall be Allowed in an aggregate amount equal to $445.9 million.
  • Each Holder of an Allowed Noteholder Deficiency Claim shall receive its Pro Rata Share of the Class D Liquidation Trust Interests, as determined in accordance with the relevant Prepetition Indenture under which such Claim arose and subject to the relevant Prepetition Trustee’s right to exercise its Prepetition Trustee Charging Lien with respect to any unpaid Prepetition Trustee Fees and Expenses.
• Each Holder of an Allowed Intercompany Claim shall receive no distribution under the Plan, and all Intercompany Claims shall be adjusted, Reinstated, or extinguished in the applicable Debtor’s discretion.
• Each Holder of an Allowed Intercompany Interest (Class 11) shall receive no distribution, and all Intercompany Interests shall be adjusted, Reinstated, or cancelled in the applicable Debtor’s discretion.
• Allowed Subordinated Claims, if any, shall be cancelled, released, and extinguished as of the Effective Date and will be of no further force or effect, with Holders receiving no distribution on account of such Claims.
• On the Effective Date, all Equity Interests shall be cancelled, released, and extinguished, and each holder of an Existing Equity Interest shall not receive or retain any Distribution, property, or other value on account of its Equity Interest.

Releases

• The “Released Parties” include, each in their capacity as such:
  • Each Debtor and each Dismissed Debtor;
  • Each Professional retained by the Debtors (for both pre- and postpetition acts and conduct);
  • The Debtors’ current and former officers, directors, and employees serving during the Chapter 11 Cases (other than Andrew Wiederhorn and his direct or extended family members), solely with respect to claims arising on or after the Petition Date and prior to or on the Effective Date;
  • The Schedule of Released Parties;
  • The DIP Lenders, the DIP Agent, the Prepetition Trustees, and the Resid Trustee;
  • The Prepetition Noteholders and the Resid Non-Retained Noteholders, in each case provided that they vote to accept the Plan;
  • The Liquidation Trustee;
  • The Committee and its members and the members of the WBS Ad Hoc Group;
  • The Representatives and Related Parties of certain of the foregoing Entities; and
  • Subject to the ongoing diligence of the Debtors, the Committee, and the DIP Lenders, any ordinary-course trade creditors whose Executory Contracts or Unexpired Leases have not been assumed and assigned to a Purchaser and against whom the Debtors may otherwise have preference actions under section 547 of the Bankruptcy Code, provided that such trade creditors vote in favor of the Plan.
• Under no circumstances shall Andrew Wiederhorn, his affiliates, his family members, and entities owned or controlled by Andrew Wiederhorn or his family members be a Released Party. A Person shall also not be a Released Party if such Person opts out of the Third-Party Release or timely objects (through a formal or informal objection that is not resolved or withdrawn before Confirmation).
• Debtor Release: On and after the Effective Date, the Released Parties will be deemed conclusively, absolutely, unconditionally, irrevocably, and forever released, to the maximum extent permitted by law, by the Debtors, the Wind-Down Debtors, and the Estates, from any and all Claims and Causes of Action that the Debtors, the Wind-Down Debtors, or the Estates would have been legally entitled to assert, based on or relating to, or in any manner arising from, any Company-Related Matters (the “Debtor Released Claims”).
• Third-Party Release: On and after the Effective Date, the Released Parties will be similarly released, to the maximum extent permitted by law, by the Releasing Parties from any and all Claims and Causes of Action that such Holders or related persons would have been legally entitled to assert, based on or relating to, or in any manner arising from, the Company-Related Matters (the “Third-Party Released Claims”).
• For the avoidance of doubt, the NewCos shall not be Releasing Parties.

Exculpation

• Effective as of the Effective Date, the Exculpated Parties shall neither have nor incur any liability to any Person or Entity for any Claims, Causes of Action, or for any act taken or omitted to be taken on or after the Petition Date and prior to or on the Effective Date in connection with or arising out of a Company-Related Matter.
• The “Exculpated Parties” are, in each case in their capacity as such: (i) the Debtors; (ii) each independent director of the Debtors (including the members of the Special Committees); and (iii) the Committee and its members.
• The Exculpated Parties have acted in compliance with the applicable provisions of the Bankruptcy Code with regard to the Solicitation of votes on the Plan and, therefore, are not, and will not be, liable at any time for the violation of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of the Plan or Distributions made pursuant to the Plan.

Injunction and Release of Liens

• The Combined Order shall permanently enjoin the commencement or prosecution by any Person, whether directly, derivatively, or otherwise, of any Claims, obligations, suits, judgments, damages, demands, debts, rights, Causes of Action, losses, or liabilities released or exculpated pursuant to the Plan or the Combined Order.
• No Person or Entity may commence or pursue a Claim or Cause of Action against any of the Exculpated Parties relating to or reasonably likely to relate to any act or omission in connection with any Released or Exculpated Claim without the Bankruptcy Court first (i) determining, after notice and a hearing, that such Claim or Cause of Action represents a colorable Claim or Cause of Action, and (ii) specifically authorizing such Person or Entity to bring it against any such Exculpated Party.
• Except as otherwise provided in the Plan or related documents, on the Effective Date and concurrently with the applicable Distributions (and, in the case of a Secured Claim, satisfaction in full of the Allowed portion of the Secured Claim), all mortgages, deeds of trust, Liens, pledges, or other security interests against any property of the Estates shall be fully released and cancelled, and all right, title, and interest of any Holder thereof shall revert to the Wind-Down Debtors and their Estates.

Conditions Precedent to the Effective Date

• The Plan and Global Settlement shall be in full force and effect, and no party shall have breached its obligations under the Global Settlement or the Global Settlement Order, unless such breach has been waived by the other parties in accordance with its terms.
• The Sale Transactions shall have been consummated on terms consistent with the Global Settlement.
• The Bankruptcy Court shall have entered the Combined Order in form and substance reasonably acceptable to the Global Settlement Parties, and such order shall not have been vacated and shall not be subject to a stay pending appeal.
• The Liquidation Trust shall have been formed, the Liquidation Trust Agreement shall have been executed, and the Liquidation Trust Assets shall have vested or be deemed to have vested in the Liquidation Trust.
• The Liquidation Trustee shall have been appointed pursuant to the Plan and Global Settlement.
• The Wind-Down Account shall have been fully funded pursuant to the terms of the Plan and the Global Settlement.
• The Bankruptcy Court shall have approved the Disclosure Statement as containing adequate information within the meaning of section 1125 of the Bankruptcy Code.
• All Allowed Administrative Expense Claims, Allowed Priority Tax Claims, Allowed Other Priority Tax Claims, and Resid Trustee Expenses shall have been paid in full (or as otherwise agreed by the applicable Holder), including all Allowed Professional Fee Claims, the professional fees of the WBS Ad Hoc Group, and all DIP Agent Fees and Expenses and Prepetition Trustee Fees and Expenses, as set forth in the Global Settlement.
• All governmental and third-party approvals, authorizations, rulings, documents, and consents necessary in connection with the Sale Transactions shall have been obtained, not be subject to unfulfilled conditions, and be in full force and effect, and all applicable waiting periods shall have expired.
• No court of competent jurisdiction or other governmental or regulatory authority shall have issued a final, non-appealable order making illegal or otherwise restricting, preventing, or prohibiting the consummation of any Sale Transactions or related transactions.
• The Escrow Account shall have been fully funded pursuant to the terms of the Plan.
• Each Transition Services Agreement (as defined in the Asset Purchase Agreements applicable to the Credit Bids) shall have terminated in accordance with its terms.

Governing Law

• Except to the extent that the Bankruptcy Code, the Bankruptcy Rules, or other federal law is applicable, or to the extent that an exhibit or schedule to the Plan provides otherwise, the rights and obligations arising under the Plan will be governed by, and construed and enforced in accordance with, the laws of the state of Delaware, without giving effect to the principles of conflicts of law.