FAT Brands Announces Proposed Settlement of Stockholder Derivative Lawsuits

Rhea-AI Summary

FAT Brands (NASDAQ: FAT) has announced a proposed settlement for two stockholder derivative lawsuits filed in Delaware's Court of Chancery. The lawsuits, filed in June 2021 and March 2022, concerned the company's December 2020 merger with Fog Cutter Capital Group and June 2021 recapitalization.

Under the settlement terms, FAT Brands will receive $10 million from insurers (subject to deduction of plaintiffs' counsel fees) and 200,000 shares of Twin Hospitality Group Inc. (NASDAQ: TWNP) from Fog Cutter Holdings LLC. The company's Board will implement certain corporate governance modifications. The settlement requires Court approval and non-objection from the United States.

Positive

• Settlement resolves all claims without admission of liability or wrongdoing
• Company to receive $10 million payment from insurers
• Additional compensation of 200,000 TWNP shares from Fog Cutter Holdings
• Implementation of corporate governance improvements

Negative

• Settlement subject to Court approval and US non-objection, creating uncertainty
• Portion of $10 million settlement will be reduced by plaintiffs' counsel fees
• Resolution of lawsuits indicates previous corporate governance issues

LOS ANGELES, Aug. 04, 2025 (GLOBE NEWSWIRE) -- FAT (Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) (the “Company”) announced today that it has entered into a stipulation of settlement to resolve two stockholder derivative lawsuits pending in the Court of Chancery of the State of Delaware (the "Court") on behalf of the Company against certain current and former directors and officers of the Company. The stockholder derivative claims were filed in June 2021 (Case No. 2021-0511-NAC, relating to the Company’s December 2020 merger with Fog Cutter Capital Group), and March 2022 (Case No. 2022-0254-NAC, relating to the Company’s June 2021 recapitalization).

The settlement will resolve all claims asserted against the named defendants in the derivative lawsuits without any liability or wrongdoing attributed to them personally or the Company. Under the terms of the proposed settlement, the Company’s Board of Directors agreed to adopt and implement certain corporate governance modifications. In addition, the Company’s insurers will pay to the Company $10 million, from which fees and expenses of plaintiffs’ counsel will be deducted, and Fog Cutter Holdings LLC will contribute 200,000 shares of Twin Hospitality Group Inc. (NASDAQ: TWNP), to the Company.

The settlement is subject to approval of the Court, and non-objection by the United States.

About FAT (Fresh. Authentic. Tasty.) Brands

FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 18 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Smokey Bones, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit fatbrands.com.

Forward Looking Statements

This news release contains forward-looking statements within the meaning of certain securities laws, including the Private Securities Litigation Reform Act of 1995, including statements regarding the agreement to settle the pending derivative lawsuits, and other statements that are not purely historical facts. These statements involve risks and uncertainties, including, among others, the uncertainty of obtaining court approval and non-objection by the United States of the proposed settlement, whether any proposed settlement is appealed, and the timing of the settlement payment. There can be no assurance that the litigation will be finally resolved in accordance with the agreement or at all. For a further description of additional risks and uncertainties relating to the business of the Company, see the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Any forward-looking statements are made only as of the date hereof and the Company does not intend to update or revise any of them, except as required by law.

MEDIA CONTACT:
Erin Mandzik, FAT Brands
emandzik@fatbrands.com
860-212-6509

FAQ

What is the settlement amount in FAT Brands' stockholder derivative lawsuits?

The settlement includes $10 million from insurers (subject to plaintiffs' counsel fees deduction) and 200,000 shares of Twin Hospitality Group Inc. (NASDAQ: TWNP) from Fog Cutter Holdings LLC.

What were the FAT Brands lawsuits about?

The lawsuits concerned FAT Brands' December 2020 merger with Fog Cutter Capital Group and the company's June 2021 recapitalization.

When were the derivative lawsuits against FAT Brands filed?

The lawsuits were filed in June 2021 (Case No. 2021-0511-NAC) and March 2022 (Case No. 2022-0254-NAC) in Delaware's Court of Chancery.

What conditions need to be met for the FAT Brands settlement to be finalized?

The settlement requires approval from the Court of Chancery of Delaware and non-objection by the United States.

How will the FAT Brands settlement affect corporate governance?

The settlement requires the Board of Directors to adopt and implement certain corporate governance modifications, though specific details were not disclosed.