The financial stability of restaurant franchisor FAT Brands is under severe threat. The company has acknowledged it may be forced to file for bankruptcy protection after receiving demands for the immediate repayment of billions in debt, triggering a critical liquidity shortfall that puts its ongoing operations in jeopardy.
Restructuring Talks Underway as Liquidity Evaporates
In a bid to avert collapse, FAT Brands is currently engaged in discussions with its bondholders. These negotiations center on potential transactions to refinance or restructure its secured debt. However, management has provided no assurance that a timely agreement on acceptable terms can be reached. The outcome of these talks is pivotal for addressing a debt burden exceeding one billion dollars.
This crisis unfolds alongside a boardroom change. James Ellis resigned from the boards of FAT Brands and its subsidiary Twin Hospitality Group Inc. on November 25, 2025, citing personal reasons.
Twin Default Notices Accelerate Financial Pressure
The situation escalated rapidly in November 2025 when the company was hit with two separate acceleration notices for outstanding debt.
Should investors sell immediately? Or is it worth buying FAT Brands?
- The first and largest notice arrived on November 17, 2025, from UMB Bank as trustee for securitized notes issued by four subsidiaries. It declared approximately $1.26 billion in outstanding principal and accrued interest immediately due and payable. FAT Brands admitted it lacks the necessary funds to meet this obligation.
- A second acceleration notice followed on November 25, 2025, also from UMB Bank. This one concerns fixed-rate, secured notes issued by subsidiary FB Resid Holdings I, LLC, totaling $158.9 million ($110 million net) plus $9.9 million in accrued interest. This subsidiary similarly lacks the liquid assets to make the payment.
Company Issues Explicit Bankruptcy Warning
The consequences of these defaults are dire. FAT Brands issued an explicit warning that the acceleration of this debt or any potential foreclosure on the collateral could materially and adversely affect its business, financial condition, and liquidity. Such a scenario could force FB Resid, FAT Brands, or certain subsidiaries to seek reorganization under bankruptcy laws.
The key implications are:
* Primary Liability: $1.26 billion due immediately from securitized notes.
* Secondary Liability: $168.8 million due immediately for FB Resid Holdings I, LLC.
* Funding Shortfall: Confirmed lack of available cash for payment.
* Formal Risk Acknowledgment: Bankruptcy proceedings named as a direct possibility.
Operational Weakness Compounds the Problem
This debt crisis compounds existing operational challenges. For the third quarter of 2025, FAT Brands reported a net loss of $58.2 million, or $3.39 per share, missing analyst estimates. Revenue declined 2.3% to $140 million. The company’s adjusted EBITDA was deeply negative at -$7.7 million.
Reflecting this deteriorating outlook, Noble Capital downgraded the equity from “Outperform” to “Market Perform” on December 1, 2025. The value of FAT Brands shares has collapsed by nearly 82% over the past twelve months. The coming weeks will determine whether the company can navigate a path out of acute financial distress.
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