Fat Brands wins court approval for $1.9 million retention bonuses

A bankruptcy judge cleared $1.9 million in retention bonuses for 114 non-insider FAT Brands workers, a sign that the people most protected in a restaurant bankruptcy are often the ones keeping payroll, field operations and day-to-day service from slipping.

FAT Brands, the parent of Twin Peaks, Johnny Rockets and a wider portfolio of chains, filed voluntary Chapter 11 petitions on January 26 in the U.S. Bankruptcy Court for the Southern District of Texas in Houston. The case includes FAT Brands Inc., Twin Hospitality Group Inc. and their subsidiaries. At filing, the company said its 18 restaurant concepts represented more than 2,200 locations worldwide and that the brands were expected to keep operating during restructuring.

The approved bonuses are equal to 15% of the workers’ salaries, according to restaurant industry reporting. That matters in a business where franchise support teams, district managers, kitchen leaders and other non-corporate employees can be the difference between a store staying open and a store losing its footing. The court order protects a relatively small group of employees, but it also draws a clear line: retention money is being used to keep the machinery moving while many other workers are left to wonder who counts as essential.

That tension is especially sharp because FAT Brands is moving through bankruptcy as a sale process, not just a cleanup of old debt. The company entered Chapter 11 with a highly leveraged balance sheet tied to about $1.3 billion in debt, and court records show the case has advanced through financing and bidding steps. A dual-tranche debtor-in-possession facility totaling up to $307.6 million was approved, and court-approved bidding procedures set an April 24 bid deadline, an April 27 auction and a May 8 sale hearing.

Industry reporting has also shown that creditors and bondholders have raised concerns about CEO Andy Wiederhorn’s leadership and the family role inside the company, adding another layer of pressure to the restructuring. A March 16 report said the company was planning an auction for its assets in April and could close by the end of May.

For restaurant workers, the message is blunt: the company is willing to pay up to keep key people in place, but that does not erase the uncertainty hanging over the rest of the workforce as lenders, bidders and executives decide what survives the sale.