After a litigious and controversial beginning and multiple, complex sales, the former fast-food chain operator is set to wind down its operations.

In the end, the Fat Brands bankruptcy process didn’t take that long after all.

A U.S. bankruptcy court gave the go-ahead for the company’s liquidation plan, signaling the beginning of the end of a case that had started with a rash of controversy but ended with the sale of all but one of its restaurant chains and more consensus than dispute.

The plan does include funds for potential legal claims against Fat Brands’ former CEO Andy Wiederhorn. It also had to overcome a couple of challenges, including one from the U.S. Trustee. But ultimately U.S. Bankruptcy Judge Alfredo Perez opted to give his endorsement to the exit strategy.

Fat Brands was sold in May in four parts, mostly to lenders that converted debt into equity. Twin Peaks was sold separately to a group of bondholders and will eventually be resold to a group of franchisees. Most of the company was sold to a separate entity owned by bondholders.

Hot Dog on a Stick was sold to the Las Vegas-based Amazing Brands for $8 million. The fast-casual burger chain Elevation Burger was sold to a company based in Kuwait for $2.5 million.

Fat Brands filed for bankruptcy in January with some $1.4 billion in debt, most of which came from bonds taken out through a series of securitizations taken out from 2021 through 2023. The company took out that debt to acquire a series of brands, including Twin Peaks, Fazoli’s, Johnny Rockets and the company that owned brands like Round Table Pizza, Hot Dog on a Stick and others.

The bonds were issued without a bond rating, so they came with a higher interest rate that the company later hoped to lower through a refinancing. But interest rate increases kept that from happening.

Fat Brands itself was also controversial. Wiederhorn before the bankruptcy was indicted on federal charges that the company steered $47 million to him and his family to skirt taxes. Those charges were dropped shortly after President Trump took office.

Wiederhorn himself would be at the center of controversy in the bankruptcy process from the get-go. Fat Brands gave two of his sons and the company’s CFO retention bonuses weeks before the bankruptcy filing. And lenders shortly after the Chapter 11 declaration tried to oust him from the company, arguing he had used Fat Brands like a “piggy bank.”

Wiederhorn ultimately left as part of a broad agreement between lenders and the company over a variety of issues. He was paid $5 million as part of the settlement agreement. But Fat Brands preserved potential legal claims against its founder.

Source https://www.restaurantbusinessonline.com/financing/fat-brands-bankruptcy-liquidation-plan-gets-court-approval