💥New Chapter 11 Bankruptcy Filing - Consolidated Burger Holdings LLC💥
On April 16, 2025, Consolidated Burger Holdings, LLC (“Consolidated Holdings”) and 2 affiliates (together with Consolidated Holdings, the “debtors”), one of the largest franchisees of Burger King restaurants, fired up (😎) chapter 11 filings in the Northern District of Florida (Judge Specie). Specifically, the debtors operate 57 Burger Kings spread across “(i) Tallahassee and Southern Georgia (18 Restaurants), (ii) South Florida (19 Restaurants), and (iii) the Florida panhandle (20 Restaurants).”
The restaurants are each subject to an individual franchise agreement with Burger King Corporation or the Burger King Company, LLC (“BKCo”) and leases with various landlords, and those obligations are, in turn, guaranteed by Consolidated Holdings, non-debtor parent Parent Consolidated Burger Holdings, LLC, or Lee Baugher, who, based on LinkedIn and some Internet sleuthing, is the debtors’ chief operating officer and owner.
All-in, here’s the debtors’ prepetition cap stack:
So these aren’t whopper (😎😎) cases, but hey, we’re making good on those ‘25 resolutions! The Auxilior Loan Facility comes from the eponymous Auxilior Capital Partners, Inc. (“Auxilior”), the subordinated facility and Southfield Note are with Southfield Mezzanine Capital LP. (“Southfield”), the Union Capital Note and 2022 Subordinated Note are owed to Union Capital Associated, L.P., and Union Capital Associated, L.P. rounds it out under the Management Agreement.
The debtors have not had it their way (😎😎😎) in recent years. They’ve been contending with industry headwinds, a too-leveraged balance sheet, and a COVID-driven loss of foot traffic, all of which contributed to declining revenue against still-steady rent and debt service obligations. In addition, the debtors cite shipping and food costs, “decreased availability of labor,” and inflation as exacerbating factors. For FY24, the debtors incurred a net loss of $12.5mm on $67mm in sales, with FY23 being better, but still negative, coming in at a $6.3mm net loss on $76.6mm in sales.