FAT Brands’ bankruptcy case took a decisive turn as the company asked a federal court to approve a sweeping governance overhaul—one that sidelines longtime CEO Andy Wiederhorn, hands control to an independent committee, and unlocks debtor-in-possession financing needed to keep the business operating.
A recent court filing outlined an agreement between FAT Brands, a group of securitization noteholders, and the official committee of unsecured creditors. Under the proposed deal, Wiederhorn will take a leave of absence from all roles and have no operational involvement. A special committee will assume control and appoint a new CEO, subject to creditor approval.
Additionally, board members will step down and Wiederhorn’s family members will be fired. The agreement also includes payments to Wiederhorn totaling up to $5 million, as well as compensation for departing board members.
READ MORE ON FAT BRANDS’ BANKRUPTCY CASE:
FAT Brands Enters Bankruptcy Amid Debt Struggles
FAT Brands Faces Leadership Turmoil Days into Bankruptcy Case
FAT Brands and Lenders Continue to Fight Over Company Control
Bankrupt FAT Brands Eyes Potential Sale
FAT Brands filed for bankruptcy in late January, saddled with $1.4 billion in debt. During the case, Wiederhorn’s role as chief executive and controlling shareholder has drawn significant criticism from lenders. The noteholder group alleged mismanagement and improper insider payments, which pushed them to file motions to remove Wiederhorn and appoint a trustee. However, as part of the mediation deal, the lenders agreed to withdraw their motions and provide financing.
“The Stipulation and Agreed Order—which is the product of over a month of intensive mediation among the Debtors, the WBS Ad Hoc Group, and the Committee—is the most significant achievement in the Chapter 11 Cases to date,” chief restructuring officer John DiDonato said in court documents.
The latest news comes as FAT Brands moves forward with a potential sale. An auction is scheduled for April 28 and a sale hearing is set for May 1. The company has already contacted more than 120 potential buyers as part of its marketing efforts. Wiederhorn, who could emerge as a bidder, is restricted from participating in the evaluation of competing offers or accessing non-public bid information.
FAT Brands operates 18 concepts and over 2,200 locations worldwide. Bids could be for the entire company or for individual concepts.
