FAT Brands and investors move to settle lawsuit over alleged misuse of company funds

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FAT Brands and the company’s shareholders have proposed a $10 million joint settlement of two derivative lawsuits that accused the company’s CEO Andy Wiederhorn and his affiliates (Fog Cutter Capital Group and Fog Cutter Holdings) of “self-dealing” and “misuse of funds.” 

One lawsuit, Harris I, filed by FAT Brands stockholders, accuses Wiederhorn of taking tens of millions of dollars from FAT Brands through insider loans and then forgiving his own debt when his holdings company merged with FAT Brands. The second lawsuit, Harris II, claims that after the merger with Fog Cutter Capital, Wiederhorn created a class of “super-voting stock” for himself, giving him permanent control of company shares and “unjustly enriching himself.”

Through the proposed settlement filed with the Delaware Court of Chancery earlier this month, the defendants would pay the company $10 million in cash, transfer 200,000 shares of the recently divested Twin Hospitality Group to FAT Brands, and adopt corporate governance reforms. These would include hiring an experienced CFO, controller, and general counsel; and creating an audit committee to review financial transactions with input from independent legal advisors.

The proposed settlement is separate from a lawsuit filed in June 2024 by former FAT Brands investor Mitchell Kates, which accused Wiederhorn and his associates of securities law violations. While that lawsuit made similar allegations of financial misconduct, it is a distinct legal matter. The Harris lawsuits are also related to prior U.S. Department of Justice and Securities and Exchange Commission investigations. The DOJ dropped its charges in July 2025, while civil charges brought by the SEC remain under appeal.

If the court approves the settlement of the Harris cases, the lawsuits would end immediately, and Wiederhorn and his associates would be protected by being sued again for the same matters. The settlement hearing is scheduled for December. 

Contact Joanna at [email protected]

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