Andy Wiederhorn will take a temporary leave of absence as the CEO of Fat Brands while his family members will be ousted from their positions as part of a proposed deal with lenders to finance the company through the bankruptcy process.
Wiederhorn, however, will still be able to bid on the owner of Twin Peaks and Round Table Pizza during the company’s upcoming sale process. He will also receive $5 million once bankruptcy financing is approved, according to court documents.
In addition, members of the Fat Brands board of directors will resign from their seats.
A special committee, including the company’s two restructuring officers and a third person to be appointed, will serve as the Fat Brands CEO through the bankruptcy process.
A hearing is set for Thursday on the settlement agreement, which has been negotiated in a mediation process that has lasted for several weeks.
Fat Brands is “at a critical juncture in these Chapter 11 cases,” the company’s chief restructuring officer, John DiDonato, said in a court document. He said that the company needs financing to get through bankruptcy and cannot do so without coming to an agreement with lenders and creditors.
The agreement, he said, will enable Fat Brands to finalize the debtor-in-position or DIP financing facility to get the company through bankruptcy.
The company needs to remain operating to preserve its “most valuable assets, namely their intellectual property, brand goodwill, factory operations and owned restaurants,” DiDonato wrote.
“Such preservation of value during the pendency of the Chapter 11 cases will only be possible if the debtors remain operating and are able to avoid the damage to their businesses that could be brought by widespread restaurant closures, factory disruptions and/or terminated relationships with franchisees and other counterparties,” he said.
Wiederhorn’s continued involvement has been a major subject of dispute in the bankruptcy, with a group of lenders initially asking for a trustee to be appointed to oversee the company through bankruptcy. They then sought to have Wiederhorn suspended.
Lenders have accused Wiederhorn of using Fat Brands like a personal “piggy bank,” citing among other things a $47 million forgiven loan from the company as well as pre-filing retention bonuses given to three executives, two of whom are his sons.
The trustee motion was set for a hearing on Tuesday, but that hearing was delayed, apparently after the sides reached an agreement.
Wiederhorn’s leave of absence will last until the sale of Fat Brands is closed and a court has confirmed the company’s Chapter 11 plan. He will also be “walled off” from all decisions having to do with the company.
Wiederhorn’s sons Taylor, Thayer and Mason will each be terminated from their positions.
Fat Brands filed for bankruptcy earlier this year with $1.5 billion in debt, most of it in the form of bonds sold to investors through a series of securitization facilities. That debt enabled the company to buy $900 million worth of chains in 18 months, including Johnny Rockets, Fazoli’s, and Round Table Pizza owner Global Franchise Group.
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