Fatburger Owner Faces Allegations It Masked Liquidity Crunch
A Fatburger restaurant in Karachi, Pakistan.
Photographer: Asim Hafeez/Bloomberg
One of FAT Brands Inc.’s shareholders is suing the restaurant-chain owner for allegedly hiding the true extent of its debt amid a darkening financial outlook that saw its stock hit a multiyear low this week.
The company, which owns Fatburger and Johnny Rockets, resorted to high-interest loans known as merchant cash advances as its finances deteriorated, according to a pair of complaints filed in Delaware Chancery Court since late November. The shareholder accuses FAT Brands of misrepresenting debt as cash to try to win fresh financing.