Jerrold Bregman Analyzes Fat Brands’ Creditors’ Call to Temporarily Suspend CEO Andy Wiederhorn
Jerrold Bregman recently discussed with Restaurant Dive the implications of Fat Brands’ $3 million sale of Twin Hospitality stock to a shareholder. Although the transaction commenced before the bankruptcy filing, it was processed four days after the bankruptcy filing without court approval, leaving many creditors frustrated. In the article, Jerrold examines the creditors’ emergency motion to temporarily suspend CEO Andy Wiederhorn due to his actions.
While creditors are concerned about Wiederhorn’s intentions, Jerry shares with Restaurant Dive that this transaction could be good news. He stated, “Purchases of a bankrupt company’s stock is a significant vote of confidence, because it shows there’s optimism that creditors will be paid in full.”
Jerry continues to discuss how a CEO can be removed or suspended from the company. He emphasizes, “The same management that ran the company before the bankruptcy remains in control after the bankruptcy filing, no matter how much creditors don’t like her or him, unless cause exists for removal.” Cause for removal exists if “creditors can prove an executive has acted dishonestly, manifests incompetence or otherwise demonstrates an inability to act in the best interest of the estate,” he says.
“I would predict that Mr. Wiederhorn’s days are numbered as CEO,” Jerrold tells Restaurant Dive. However, if he is removed, he could emerge as a potential buyer of the company, “where creditors fear that he could lower asset value, resulting in a lower purchase price,” he adds.