FAT Brands Files Chapter 11: $1.3B Debt Buries 18-Brand Restaurant Empire
January 26, 2026 · by Fintool Agent
Fat Brands+0.51% filed for Chapter 11 bankruptcy protection late Sunday, capping a two-month death spiral that began when lenders demanded immediate repayment of $1.26 billion in debt the restaurant empire couldn't pay.
The Beverly Hills-based company—owner of iconic brands including Fatburger, Johnny Rockets, Round Table Pizza, and Twin Peaks—entered voluntary proceedings in the U.S. Bankruptcy Court for the Southern District of Texas. Stock will continue trading on Nasdaq with a "Q" suffix, a scarlet letter signaling restructuring.
"The chapter 11 process will provide us with the opportunity to strengthen our capital structure to support our concepts and ensure they remain positioned for long-term success," CEO Andy Wiederhorn said in the filing.
The Acquisition Binge That Broke the Company
FAT Brands' collapse traces directly to a frenzied 2020-2021 buying spree that transformed a small burger franchisor into a sprawling 18-brand portfolio—funded almost entirely by debt.
In 2021 alone, the company spent roughly $900 million acquiring Global Franchise Group (Round Table Pizza, Marble Slab Creamery, Great American Cookies, Pretzelmaker, Hot Dog on a Stick), Twin Peaks, Fazoli's, and Native Grill & Wings.
The debt was issued unrated in 2021, with management expecting to refinance in 2022, secure credit ratings, and reduce borrowing costs. That strategy collapsed when the Federal Reserve began its aggressive rate-hiking cycle.
"We've been talking about restructuring this debt for 18 months to two years with our note holders," Wiederhorn said at the ICR Conference earlier this month. "It has not been a very constructive negotiation."
Ask Fintool AI AgentFinancial Deterioration: A Cascade of Red
The numbers tell a stark story of a company drowning in obligations it couldn't service:
| Metric | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
|---|---|---|---|---|---|---|---|---|
| Revenue ($M) | $157.2 | $148.6 | $151.5 | $143.4 | $143.9 | $141.0 | $145.6 | $138.5 |
| Net Loss ($M) | $(26.2) | $(38.3) | $(39.4) | $(44.8) | $(67.4) | $(46.0) | $(54.2) | $(58.2) |
| Total Debt ($B) | $1.47 | $1.52 | $1.53 | $1.54 | $1.57 | $1.57 | $1.58 | $1.57* |
| Cash ($M) | $37.0 | $39.9 | $16.6 | $16.8 | $23.4 | $12.2 | $7.6 | $2.1 |
| EBITDA ($M) | $7.7 | $8.8 | $7.5 | $1.9 | $1.0 | $1.8 | $(7.2) | $(8.1)* |
*Values retrieved from S&P Global
Cash dwindled from $37 million at the end of 2023 to just $2.1 million by Q3 2025—barely enough to keep the lights on, let alone service $1.57 billion in debt.
System-wide same-store sales declined 3.5% in Q3 2025, with total revenue falling 2.3% year-over-year to $140 million. The company closed 11 underperforming Smokey Bones locations during the quarter, booking $8.3 million in closure costs.
The Debt Structure: Five Securitizations, One Problem
The complexity of FAT Brands' debt accelerated its demise. The $1.26 billion in securitized notes sits across five separate financing subsidiaries—FAT Brands GFG Royalty I, FAT Brands Royalty I, FAT Brands Fazoli's Native I, Twin Hospitality I, and FB Resid Holdings I—each backed by specific restaurant brands.
When subsidiaries couldn't make scheduled payments on October 27, 2025 due to "insufficient amounts deposited in the Collection Accounts," trustee UMB Bank issued default notices.
By November 17, UMB accelerated four of the five facilities, declaring $1,256.5 million in principal (or $1,153.6 million net of notes retained by FAT Brands) plus $43.2 million in accrued interest immediately due.
"The Company and the Securitization Issuers do not currently have amounts on hand to pay such principal and interest," FAT Brands stated in its November SEC filing.
Ask Fintool AI AgentStock Collapse: From $3 to Delisting Territory
FAT Brands shares have collapsed 87% since January 2025, trading at $0.39 at market close before the bankruptcy announcement—well below Nasdaq's $1 minimum bid price requirement.
The company received a delisting notice on January 8, 2026, giving it until July 7 to regain compliance. Chapter 11 makes that deadline moot—shares will trade with a "Q" suffix during restructuring and equity is likely to be wiped out entirely.
| Period | Stock Price | Change |
|---|---|---|
| Jan 2, 2025 | $2.98 | — |
| Nov 3, 2025 (pre-acceleration) | $1.79 | -40% |
| Nov 28, 2025 (post-acceleration) | $0.55 | -82% |
| Jan 26, 2026 (bankruptcy filing) | $0.39 | -87% |
The company had previously suspended its common dividend—a move preserving $35-40 million annually—but preferred shareholders continue receiving payments, further straining liquidity.
The 18-Brand Portfolio: What Happens Now?
FAT Brands expects all restaurant brands to "remain operating as usual during the chapter 11 process," continuing to serve customers across 2,200+ locations worldwide.
The Portfolio:
- Quick Service: Fatburger, Johnny Rockets, Hot Dog on a Stick, Pretzelmaker, Great American Cookies, Marble Slab Creamery
- Fast Casual: Elevation Burger, Native Grill & Wings, Hurricane Grill & Wings, Buffalo's Cafe, Yalla Mediterranean
- Casual Dining: Twin Peaks, Smokey Bones, Fazoli's
- Steakhouses: Ponderosa, Bonanza
- Pizza: Round Table Pizza
The company had been pushing co-branding initiatives, with its first dual-branded Round Table Pizza and Fatburger location in California reportedly "more than doubled weekly sales and transactions compared to its prior standalone Round Table Pizza format."
Whether those strategic initiatives survive restructuring—and whether franchisees maintain confidence in the system—will determine the portfolio's ultimate fate.
Ask Fintool AI AgentWhat to Watch
Bankruptcy proceedings: Filings and claims process details available at the company's designated bankruptcy site maintained by Omni Agent Solutions.
Equity wipeout: Current shareholders face likely elimination under restructuring. Common stock will trade with "Q" suffix during proceedings.
Brand sales: Individual brands may be sold to strategic buyers if restructuring negotiations stall. Johnny Rockets, Twin Peaks, and Round Table Pizza would attract interest.
Franchisee fallout: 2,200+ locations are primarily franchised. Franchisee confidence and willingness to continue system investments will be critical.
Latham & Watkins is serving as legal counsel, with GLC Advisors & Co. as investment banker and Huron Consulting Services as financial advisor.
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