Fat Brands appears to be making progress toward the financing of the company through bankruptcy and an ultimate sale of its chains, according to court filings in its bankruptcy last week.
The fast-food chain operator is planning an auction for its assets in April, according to a filing of sale procedures submitted on Friday. That process could close by the end of May.
But that filing also highlighted progress in mediation between the owner of Twin Peaks and lenders and creditors, which suggested that a deal on financing to get the company through the process could come within days.
“The mediation process remains ongoing and continues to foster productive communication and negotiation amongst the parties,” the filing says.
The bidding procedures include some language designed to restrict CEO Andy Wiederhorn’s role in the process, a major point of contention between the company and its lenders.
Wiederhorn is not allowed to evaluate the bids outside of any he submits himself, can’t receive any non-public information about any bids, cannot communicate with any other bidder and cannot advise the company on the sale process, according to the filing.
Fat Brands, which owns 16 chains including Round Table Pizza, Johnny Rockets and Fazoli’s, filed for bankruptcy earlier this year with $1.5 billion in debt. Much of that debt is in the form of bonds sold to investors through a securitization process, so there are numerous investors with which the company must negotiate.
The process itself has been both complicated and acrimonious, with a committee of those investors levying heavy criticism against Fat Brands and Wiederhorn, the company’s controlling shareholder.
Lenders have accused Wiederhorn of using the company like a “piggy bank,” citing in part a $47 million, forgiven loan from the company to the Wiederhorn family that was central to a now-dropped tax charge against the CEO. Those same lenders have been pushing to have a trustee appointed to manage Fat Brands through the bankruptcy process and at one point asked a court to suspend Wiederhorn.
Fat Brands asked for mediation the moment that it filed for Chapter 11 bankruptcy, citing the complexity of the process and the lack of agreement among the different parties.
According to the filing, the lenders and the company believe that the best way to maximize Fat Brands’ value is through “going-concern asset sales.” Investment bankers have been gauging interest in the group of chains for weeks, sending emails to prospective buyers using the term “Project Whistler."
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