PORTLAND Ore. Two subsidiaries of the Fatburger quick-service chain filed for Chapter 11 bankruptcy protection this week as parent company Fog Cutter Capital Group struggles with loan default notices.
Fatburger Restaurants of California Inc. and Fatburger Restaurants of Nevada Inc. both filed for reorganization on Tuesday in the U.S. Bankruptcy Court for Central California in Los Angeles.
Fog Cutter Capital officials reportedly said the move would allow the companies, which collectively operate 32 restaurants, to renegotiate leases as the units attempt to survive the painful recession. Both California and Nevada have been particularly hard hit by the economic downturn.
According to filings with the U.S. Securities and Exchange Commission, the court action was triggered after several of the company’s Fatburger subsidiaries in March received a notice of default on about $3.85 million in loans owed to G.E. Capital Business Asset Funding Corp., the company’s primary lender, with payments due April 7.
With the bankruptcy filing, Fatburger will attempt to restructure the G.E. loans, according to the filing.
Fog Cutter Capital in March also received notice of delisting from the OTC Bulletin Board for failing to file its annual report form for the fiscal year ended Dec. 31, 2008. Following the 30-to-60-day grace period, the company’s stock will no longer be listed on the OTC, but will continue to be listed on the Pink Sheets Electronic OTC Markets.
Based in Santa Monica, Calif., the 93-unit Fatburger chain was acquired by Portland, Ore.-based Fog Cutter Capital in 2003.
Andrew Wiederhorn, Fog Cutter's chief executive, told The Oregonian newspaper this week that Fatburger’s same-store sales for 2008 will be down about 4 percent from the previous year. Fog Cutter reported a loss of $9.1 million for the first nine months of 2008.
Contact Lisa Jennings at [email protected].
