Fatburger Owner Settles Lawsuit With Its Lender

Fog Cutter Capital Group, the Beverly Hills-based owner of Fatburger and Buffalo’s Café, has settled agreed to settle a $5.1 million lawsuit filed by its lender, American Industries. Under the deal, Fog Cutter has agreed to pay American Industries up to $1.8 million over three years.

The dispute centered around the value of collateral that Fog Cutter had given to American in the years since American had made loans to the private equity firm. American claimed that Fog Cutter had fallen behind on $3.6 million in loans made in 2008 and 2009, and continued to be behind despite a forbearance agreement and a workout. Since then, according to American’s complaint, the value of that debt has increased to $5.1 million.

Fog Cutter, however, said in its response that the two sides had reached an agreement in February and march to settle the lawsuit for $1.58 million, and that American had added terms to the deal not previously discussed. Fog Cutter said that it had already given American collateral in the deal, in the form of shares of a lens machine tool called DAC International.

Under the deal, American agreed to dismiss the lawsuit. “The court system is never an efficient venue to solve business disputes,” Andrew Wiederhorn, Fog Cutter’s CEO, said in a statement. “I am very pleased that we were able to quickly settle this matter.”

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News, notes and commentary on franchise financing, including SBA lending, both the SBA 7(a) program and the SBA 504 program, franchise finance programs, development incentives, big deals and startup lending.

  Mary Jo Larson is the publisher of Franchise Times Magazine and its sister publication, the Restaurant Finance Monitor. She is a frequent speaker at meetings and conferences, and at the Restaurant Finance & Development Conference. You can find her on Twitter at @mlarson1011.
  Reporter Jonathan Maze covers restaurants and finance for Franchise Times. He also writes for our sister publication, The Restaurant Finance Monitor, and writes a daily blog on the restaurant industry at www.restfinance.com. You can also catch him on Twitter at @jonathanmaze.




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