When companies file for bankruptcy, it is often not because they are not cash flow positive.
Bankruptcies can occur simply because a company cannot generate the cash it needs to service its debts. In many cases, if you take out that loan, the business itself will succeed.
That’s the argument FAT Brands CEO Andy Wiederhorn made at the ICR conference in Orlando on January 12.
“We are talking to our noteholders about restructuring this debt over 18 months to two years,” Wiederhorn said, according to Nationwide Restaurant News. “It has not been a very constructive negotiation … we are looking at ways to reduce the debt and make it viable. I can say that it will go quickly and be resolved, but it may take a couple of rounds.”
The company warned late last year that it might have to file for Chapter 11 bankruptcy when a major creditor called in its notes. Wiederhorn’s comments made it clear that the situation is more complicated than it appears on the surface.
FAT Brands owns several big-name restaurant brands, including Johnny Rockets, Ponderosa Steakhouse, Great American Cookie, and the Twin Peaks restaurant concept, which it owns as a subsidiary.
The company shared details of its latest financial woes in a 10-K filing with the SEC.
“On November 25, 2025, FAT Brands Inc. received a Notice of Acceleration (the “Acceleration Notice”) from UMB Bank, National Association, as trustee under the Aadhaar Indenture dated July 10, 2023, issued by FB Resid Holdings I, LLC, the Company’s subsidiary, FB Residing and the secured rates from FB Residing and FB Residing. The Resid. Acceleration Notice stated that UMB, FB Pursuant to Section 9.2 of the Residual Indenture, the outstanding principal amount of the FB Residual Notes is immediately due and payable by the Company, acting at the direction of the controlling class representative under the FB Residual Indenture.
In practical terms, UMB has provided Fat Brands with a “Notice of Event of Default” in connection with the FB Resid Indenture stating that an Event of Default has occurred pursuant to Section 9.2 of the FB Resid Indenture. The aggregate principal amount was in accordance with Section 9.2 of the FB Residual Indenture. The total principal amount is not outstanding under FB 1 million dollars or $1. $110.0 million net of FB Resid Note,” it shared.
Similar notices were sent to four other subsidiaries of FAT Brands.
FAT Brands has a complex financial structure.
“While a trustee has announced FAT Brands’ $1.26 billion loan is immediately due, Wiederhorn said Tuesday that the loan is not entirely guaranteed by the parent company. Instead, the total liability is spread across five securitization trusts, involves multiple layers of investors, and is tied to individual brands,” NRN reported.
This means that it can, in theory, file for Chapter 11 bankruptcy for parts of the business, but not all of it.
Wiederhorn, who was indicted by the U.S. government on money laundering charges but dismissed, clarified in his remarks, “The debt restructuring process was complicated by the involvement of approximately 25 different investors or noteholders who could not agree on a single solution,” according to NRN.
The company, he claimed, was in “good shape” with $60 million in free cash flow, despite $1.26 billion in debt.
“We need restructuring to make the debt stack affordable,” Wiederhorn said. “I think that’s the conclusion that our noteholders need to come to sooner rather than later.”
Fatburger: Signature Burger Chain and Founder Brand of FAT Brand
Johnny Rockets: Classic diner-style burger and shake restaurant
Elevation Burger: Organic/Better Burger Concept
Fazoli’s: Italian quick-service restaurant chain
Round Table Pizza: Pizza chain with traditional and delivery formats
Great American Cookies: Cookie and Sweet Franchise
Marble Slab Creamery: A premium hand-blended ice cream franchise
Hot dog on a stick: Fast-casual hot dog and lemonade brand
Pretzelmaker: Pretzel and snack brands (often co-located with other concepts)
Buffalo’s Cafe and Express: Wings and the American Cafe concept
Hurricane grill and wings: Wings and grill chain
Native grill and wings: Regional Wing & Grill Brand (Added in 2021)
Twin Peaks: Sports bars/lodges, casual dining, and bar chains
Smokey Bones Bar and Fire Grill: Barbecue/Grill Casual Dining Brand (Added 2023)
Yalla Mediterranean: Mediterranean quick-casual brand
FAT Brands owns the Johnny Rockets burger chain.PV Productions/Shutterstock” loading=”lazy” height=”540″ width=”960″ class=”yf-lglytj loader”/>
FAT Brands owns the Johnny Rockets burger chain.PV Products Shutterstock
“The FAT brand has potential due to revenue growth and strategic initiatives such as the twin hospitality spin-offs. However, financial instability with high profitability, persistent losses, and negative cash flow are significant concerns. The stock’s technical indicators show neutral momentum, and while valuation metrics such as dividend yield are negative/negatively attractive,” TipRanks reported.
After covering retail, restaurants and the stock market for 30 years, I’ve seen countless public brands wipe out shareholder equity in Chapter 11 bankruptcy cases.
More bankruptcies:
“A company declares bankruptcy because it owes more than it can pay. To rid itself of this, it works with banks and other creditors to think of a new company that doesn’t owe much money. Almost always, that company is one in which current shareholders don’t own shares,” said Chris Stuttard, editor of BankruptcyDataStreetcom.
“Our experience is that after bankruptcy you get a very low return on equity,” he added.
FAT Brands’ CFO tried to put a positive spin on the company’s third quarter results in his Q3 earnings release.
“We are implementing several strategic initiatives to strengthen our balance sheet. Our dividend pause remains in effect, securing $35-$40 million in annual cash flow. We are actively negotiating with our noteholders for a debt restructuring,” he shared.
Total revenue fell 2.3% to $140.0 million compared to $143.4 million in the fiscal third quarter of 2024.
Systemwide sales fell 5.5%.
Systemwide same-store sales fell 3.5%. Thirteen new stores were opened in the third quarter of fiscal 2025.
Net loss was $58.2 million, or $3.39 per diluted share, compared to $44.8 million, or $2.74 per diluted share, in the third quarter of 2024.
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This story was originally published by TheStreet on January 13, 2026, where it first appeared in the Restaurants section. Add TheStreet as a preferred source by clicking here.
