Lawsuit Filed Against Fat Brands Accusing the Firm of Masking Severe Cashflow Problems

December 19, 2025 - Shareholder Kevin Gordon has filed a lawsuit against Fat Brands in Delaware court, accusing the company—which owns chains like Fatburger and Fazoli’s—of masking severe cashflow problems through short-term borrowing and up to $15 million in high-interest merchant cash advances while funneling money to insiders. The suit alleges that Fat Brands artificially boosted its reported liquidity, approved post-spin-off bonuses, and improperly excluded certain bond transactions from liabilities, amid risks of a $1.4 billion debt demand and potential bankruptcy. Fat Brands declined to comment on the lawsuit but referenced its own prior legal action against Gordon's firm regarding unsuccessful bond deals.

https://www.restaurantbusinessonline.com/financing/shareholder-alleges-fat-brands-masked-its-cashflow-problem