The bankruptcy proceedings of one of the world’s largest multi-brand restaurant franchisors reached a significant milestone this week after a U.S. bankruptcy court approved FAT Brands Inc.’s Chapter 11 liquidation plan, formally allowing the company to wind down after months of restructuring, asset sales and legal disputes.
The order, issued by U.S. Bankruptcy Judge Alfredo Perez in Houston, concludes a complex Chapter 11 process that began in January 2026, when FAT Brands sought bankruptcy protection with approximately US$1.4 billion in debt. The company attributed its financial distress to a heavy debt burden, rising borrowing costs, inflationary pressures and mounting legal expenses. The liquidation plan was approved after stakeholders reached a broad consensus following months of negotiations.
Importantly, the liquidation does not mean the company’s restaurant brands or franchised outlets will shut down. In bankruptcy, liquidation refers to the dissolution of the corporate holding company and the distribution of its remaining assets to creditors. In FAT Brands’ case, most of its operating businesses had already been sold as going concerns during the Chapter 11 process, ensuring that the franchise systems continue operating under new ownership.
Through court-approved debt-for-equity transactions, creditor groups acquired the majority of the company’s restaurant portfolio, including Fatburger, Johnny Rockets, Round Table Pizza, Fazoli’s, Great American Cookies, Marble Slab Creamery, Pretzelmaker, Hurricane Grill & Wings, Buffalo’s Cafe, Native Grill & Wings, Ponderosa and Bonanza Steakhouses. Twin Peaks was separated into an independently owned business controlled by lenders, while Hot Dog on a Stick was sold to Amazing Brands LLC for US$8 million.
The approved liquidation plan also establishes a US$1.5 million litigation trust to investigate and pursue potential claims on behalf of creditors against former insiders, including former Chief Executive Andrew Wiederhorn. The bankruptcy proceedings were marked by governance disputes, with creditors attempting to remove Wiederhorn before a settlement was eventually reached earlier this year.
For franchisees, the court’s decision is expected to have limited operational impact, as restaurants will continue to operate under their new owners rather than under the FAT Brands holding company. Existing franchise systems, support functions and brand operations are being transferred to the acquiring entities, making this a restructuring of corporate ownership rather than a closure of the franchise networks.
The case is being closely watched across the franchising sector as an example of how modern Chapter 11 proceedings can preserve franchise brands while dismantling the indebted parent company. Rather than liquidating individual restaurants, the process focused on protecting brand value, maintaining franchise operations and maximizing recoveries for creditors.
Founded in 2017 and headquartered in Beverly Hills, California, FAT Brands grew rapidly through acquisitions to become one of the restaurant industry’s largest multi-brand franchisors. Over the years, it assembled a portfolio of 18 restaurant brands, including Fatburger, Johnny Rockets, Twin Peaks, Round Table Pizza, Fazoli’s, Smokey Bones, Great American Cookies and Marble Slab Creamery.
At the time of its bankruptcy filing, the company oversaw more than 2,200 restaurants globally, including over 1,900 franchised locations and approximately 150 company-operated restaurants, with franchising serving as the core of its business model.
With the court’s approval of the liquidation plan, FAT Brands as a corporate holding company will now be dissolved, while the restaurant brands it built are set to continue operating under their respective new owners, bringing one of the restaurant franchise industry’s most high-profile restructuring cases to its conclusion.
