A HOUSTON COURT ENDED FAT BRANDS AND EVERY COUNTER IN THE CITY STAYED OPEN

On July 27 a bankruptcy judge in Houston signed off on the liquidation of FAT Brands, the company that spent five years buying restaurant chains with borrowed money. Eighteen brands. More than 2,200 locations. In New York the ruling changed nothing anybody could see. The Great American Cookies counter at 700 Exterior Street in Concourse opened the next morning the way it opens every morning.

A whole business securitization works like this. A franchisor takes the income it collects from its franchisees, the royalty on every sale, the advertising fund contribution, the license fee, and moves it into a separate legal box. Bondholders buy claims on the money in that box. Because the cash is walled off from the parent company, ratings agencies treat it as safer than the parent, and the parent borrows at a rate its own credit would never earn.

The structure started with British pub operators and moved into American fast food in the mid-2000s. Domino's has run one since 2007. Dunkin', Wendy's, Sonic, Taco Bell, Applebee's and IHOP have all used it. Roark Capital financed its Subway purchase with roughly $5.7 billion in these notes across three bond sales. Jersey Mike's borrowed $760 million the same way in early 2026. Wingstop uses it.

None of that money is a bet on a corporate strategy. It is a bet on the reliability of franchisee payments. The collateral is a person unlocking a door at seven in the morning.

FAT Brands used the structure to buy. Johnny Rockets in 2020 for $25 million. Global Franchise Group in 2021 for $442.5 million, which brought in Round Table Pizza, Great American Cookies, Marble Slab Creamery, Pretzelmaker and Hot Dog on a Stick. Twin Peaks and Fazoli's followed that year.

The notes that funded the spree were issued between 2021 and 2023 without a bond rating, which meant a higher interest rate than a rated deal would carry. The plan was to refinance into something cheaper. Rates rose instead. By January the funded debt sat at roughly $1.46 billion across four separate securitization silos, and the noteholders held about 85 percent of the outstanding notes. FAT Brands filed for Chapter 11 on January 26, 2026 in the Southern District of Texas, case number 26-90126.

What followed was fast. A governance fight between the company's controlling founder and the noteholders went to mediation and ended with him out. A debtor in possession facility of up to $307.6 million carried the case to an April auction. On May 19 the court entered four sale orders.

The largest went to FBG Bid Co., an entity formed by the lender group, which took Fatburger, Johnny Rockets, Round Table Pizza, Fazoli's, Great American Cookies, Marble Slab Creamery, Pretzelmaker, Buffalo's, Hurricane Grill and Wings, Native Grill and Wings, Ponderosa and Bonanza, plus the Georgia bakery that supplies Great American Cookies and Pretzelmaker. The price was $595 million, and it was a credit bid, meaning the lenders paid with debt the company already owed them rather than with cash. Twin Peaks went to TWNPKS Bid Co. Hot Dog on a Stick sold for $8 million. Elevation Burger sold for $2.5 million.

A joint plan of liquidation followed on May 22. It allows $445.9 million of prepetition secured obligations as general unsecured claims, funds a $9.23 million wind down, and seeds a liquidation trust with at least $1.5 million to chase what is left. On July 27 Judge Alfredo Perez confirmed it, overruling a Justice Department objection about how creditors were polled on releasing claims against third parties.

Great American Cookies at 700 Exterior Street sits inside Bronx Terminal Market, under the Major Deegan, four blocks from Yankee Stadium. It takes orders on DoorDash, Uber Eats and Grubhub. It sells cookie cakes to people who work in the South Bronx.

Nothing in the case turned on that address, and nothing at that address turned on the case. That is the whole point. A 363 sale moves the brand, the trademark, the franchise agreements and the royalty stream in one motion. It does not consult the counter. A franchise agreement is a contract to pay a franchisor. It is not a share, and it carries no vote on who the franchisor becomes.

Walk any commercial strip in Queens and count the awnings. Dunkin'. Subway. Domino's. Wingstop. Jersey Mike's. Behind a large share of them is a bond structure that treats the operator's weekly payment as collateral. It is legal, it is common, and it is mostly quiet while sales hold. FAT Brands is what the far end looks like. Debt raised against franchisee income, spent on acquisitions, and settled by handing the brands to the people who lent the money.

The New York operators inside these systems did not build the leverage and did not vote on it. They pay into it. When it fails, the brand above their door changes hands in a courtroom in another state, and the first they hear of it is a letter.

The counter opens at ten. Somebody else owns the sign.

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