Fatburger owner files for bankruptcy over high debt, legal woes

By Dietrich Knauth

Jan 27 - FAT Brands, the parent company of restaurant chains such as Fatburger, Johnny Rockets, and Round Table Pizza, filed for bankruptcy protection in Houston late Monday after its business took a hit from the indictment of its former CEO and rising costs on its $1.4 billion in debt.

The company and its franchisees operate over 2,200 restaurants, and those restaurants will remain open for business during FAT Brands’ bankruptcy, the company’s CEO Andy Wiederhorn said in a statement.

FAT Brands entered bankruptcy with just $2.1 million in cash on hand, and it received permission from a U.S. bankruptcy judge on Tuesday to use some of that cash to ensure that $400,000 in recently issued checks would not bounce when employees went to cash them.

FAT Brands in court filings said its business has suffered from common headwinds in the restaurant industry, like persistent inflation and lower customer demand for casual dining restaurants. But the company’s high debt meant that it also spent $72 million in interest penalties and amortization payments since 2022, and it has paid $85 million in legal fees since 2021.

The U.S. Department of Justice indicted FAT Brands, its former CEO Andrew Wiederhorn, and others in 2024, accusing Wiederhorn of taking $47 million in undisclosed loans from the company and avoiding tax payments owed to the government. The DOJ later moved to drop those charges, citing Republican President Donald Trump's new policy of prioritizing immigration enforcement and scaling back investigations of white-collar crime, and the case was dismissed in August 2025.

The U.S. Securities and Exchange Commission, which filed a civil suit when the company was indicted, has an agreement in principle to settle that litigation, although it is not yet final, according to FAT Brands' court filings.

FAT Brands directly operates about 150 of its restaurants, with over 1,900 other restaurants operated under franchise agreements. It has 7,500 direct employees in the U.S., and its franchise partners have approximately 45,000 employees worldwide.

FAT Brands owns 18 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Smokey Bones, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean, and Ponderosa and Bonanza Steakhouses.

The case is In re FAT Brands Inc., U.S. Bankruptcy Court for the Southern District of Texas, No. 26-90126

For FAT Brands: Ray Schrock and Natasha Hwangpo of Latham & Watkins LLP; Tad Davidson and Ashley Harper of Hunton Andrews Kurth LLP; among others.

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