Burger, wings, and bar empire faces looming Chapter 11 bankruptcy
Daniel Kline
Tue, January 13, 2026 at 5:33 PM EST
6 min read
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When companies file for bankruptcy, often it isn't because they're not cash flow positive.
Bankruptcies can happen simply because a company can't generate the cash needed to service its debt. In many cases, if you took that debt away, the business itself would actually be successful.
That's the argument FAT Brands CEO Andy Wiederhorn made on Jan. 12 at the ICR conference in Orlando.
“We've been talking about restructuring this debt for 18 months to two years with our note holders,” Wiederhorn said, according to Nation's Restaurant News. “It has not been a very constructive negotiation…We’re looking at avenues to lower the debt and make it practical. I wish I could say that this would go quickly and get 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 after a key lender called its note. Wiederhorn's comments made it clear that the situation is more complicated than it appears on the surface.
FAT Brands warned of bankruptcy risk
FAT Brands owns a number of big-name restaurant brands, including Johnny Rockets, Ponderosa Steakhouse, Great American Cookie, and the Twin Peaks restaurant concept, which is owned by a subsidiary.
The company shared the details of its latest financial problem 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 Base Indenture, dated July 10, 2023 by and between the company’s subsidiary, FB Resid Holdings I, LLC FB Resid and UMB, relating to fixed rate secured notes issued by FB Resid. The Acceleration Notice stated that UMB, pursuant to Section 9.2 of the FB Resid Indenture, acting at the direction of the Controlling Class Representative under the FB Resid Indenture, accelerates and declares the outstanding principal amount of the FB Resid Notes to be immediately due and payable,” the company wrote.
In practical terms, the filing said that UMB delivered to Fat Brands a “Notice of Event of Default” with respect to the FB Resid Indenture, stating that an “Event of Default had occurred pursuant to Section 9.2 of the FB Resid Indenture. The aggregate principal amount outstanding under the FB Resid Notes is $158.9 million, or $110.0 million net of FB Resid Note,” it shared.
Similar notices were sent to four other subsidiaries of FAT Brands.
FAT Brands may file more than one bankruptcy
FAT Brands has a complicated financial structure.
"While a trustee has declared FAT Brands’ $1.26 billion in debt immediately due, Wiederhorn stated on Tuesday that the debt is not guaranteed by the parent company as a whole. Instead, the total liability is spread across five securitization trusts, involves multiple layers of investors, and is tied to individual brands," NRN reported.
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That means that it could, 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 had those charges dismissed, explained during his remarks that "the debt restructuring process has been complicated by the involvement of approximately 25 different investors or note holders, who have been unable to agree on a single solution," according to NRN.
The company, he claimed, despite the $1.26 billion in debt, was "in good shape” with $60 million of free cash flow.
“We just need the debt stack restructured to be affordable,” Wiederhorn said. “I think that's a conclusion our note holders need to come to sooner rather than later.”
FAT Brands has a deep portfolio
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Fatburger: Signature burger chain and founding brand of FAT Brands
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Johnny Rockets: Classic diner‑style burger and shake restaurant
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Elevation Burger: Organic/better‑burger concept
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Fazoli’s: Italian quick‑service restaurant chain
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Round Table Pizza: Pizza chain with traditional and delivery formats
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Great American Cookies: Cookie and sweets franchise
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Marble Slab Creamery: Premium hand‑mixed ice cream franchise
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Hot Dog on a Stick: Fast‑casual hot dog and lemonade brand
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Pretzelmaker: Pretzel and snack brand (often co‑located with other concepts)
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Buffalo’s Cafe & Express: Wings and American café concept
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Hurricane Grill & Wings: A wing and grill chain
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Native Grill & Wings: Regional wing and grill brand (added in 2021)
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Twin Peaks: A sports bar/lodge, casual dining, and bar chain
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Smokey Bones Bar & Fire Grill: Barbecue/grill casual dining brand (added in 2023)
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Yalla Mediterranean: Mediterranean fast-casual brand
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Ponderosa Steakhouse & Bonanza Steakhouse: Family‑friendly steakhouse chains Source: FAT Brands website
Analysts see risks with FAT Brands
"FAT Brands has potential due to revenue growth and strategic initiatives like the Twin Hospitality spin-off. However, financial instability with high leverage, persistent losses, and negative cash flows are significant concerns. The stock’s technical indicators show neutral momentum, and while valuation metrics like dividend yield are attractive, the negative P/E ratio highlights underlying risks," TipRanks reported.
Having covered retail, restaurants, and the stock market for 30 years, I've seen countless public brands wipe out shareholder equity with a Chapter 11 bankruptcy case.
More Bankruptcy:
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Key auto parts and services company files Chapter 11 bankruptcy
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Self-driving-car company files for Chapter 11 bankruptcy protection
"A company declares bankruptcy because it owes more than it can pay. To extricate itself from this, it works with banks and other creditors to create what can be thought of as a new company that doesn’t owe as much money. Almost always, that company is one that current shareholders won’t own shares in," Chris Stuttard, editor of BankruptcyData.com told TheStreet.
“Our experience is that you get very little return on equity after bankruptcy,” he added.
FAT Brand is still losing money
FAT Brand's CFO tried to put a positive spin on the company's third-quarter results in its Q3 earnings release.
"We are implementing several strategic initiatives to strengthen our balance sheet. Our dividend pause remains in effect, preserving $35-$40 million in annual cash flow. We are actively negotiating a debt restructuring with our noteholders," he shared.
Fiscal third-quarter 2025 highlights
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Total revenue declined 2.3% to $140.0 million compared to $143.4 million in the fiscal third quarter of 2024.
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Systemwide sales declined 5.5%.
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Systemwide same-store sales declined 3.5%. Thirteen new stores were opened during the fiscal third quarter of 2025.
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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 fiscal third quarter of 2024.
Related: Forget Red Lobster, another seafood chain closed 135 restaurants
This story was originally published by TheStreet on Jan 13, 2026, where it first appeared in the Restaurants section. Add TheStreet as a Preferred Source by clicking here.
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