FAT Brands Creditors Challenge Bankruptcy Sales, Lender Takeover

Creditors of FAT Brands Inc. moved to block the company’s proposed bankruptcy sale of several chain restaurant brands to a group of lenders, pitching a legal battle over the strength of noteholder claims.

A pending lender takeover of Johnny Rockets, Twin Peaks, and several other national restaurant chains owned by FAT Brands overvalues lenders’ leverage and would leave the brand operator’s estate unable to pay senior claims, according to a committee of unsecured creditors. The committee filed a sale objection Monday with the US Bankruptcy Court for the Southern District of Texas.

FAT Brands’ lenders hold over $1.4 billion of ...