What caused BossCo Holdings to deconsolidate Checkers on June 16, 2023?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
, which was a wholly owned subsidiary of Burger BossCo Holdings, Inc. ("BossCo Holdings" or "Parent"). BossCo Holdings was a holding company controlled by various funds operated by Oak Hill Capital Partners ("Oak Hill").
Successor
On June 5, 2023, Burger BossCo, Holdings, CDI, and certain of their affiliates commenced solicitation of consents to an out-of-court restructuring of the capital structure of Burger BossCo (the "Out-of-Court Restructuring") from holders of (a) loans under that certain Amended and Restated First Lien Credit Agreement, dated as of August 21, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the "First Lien Credit Agreement" and such loans, the "First Lien Loans"), by and among Holdings, Burger BossCo, the lenders from time to time party to the First Lien Credit Agreement (the "First Lien Lenders"), and Jefferies Finance LLC, as administrative agent and collateral agent for the First Lien Lenders, and (b) loans under that certain Amended and Restated Second Lien Credit Agreement, dated as of August 21, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the "Second Lien Credit Agreement" and such loans, the "Second Lien Loans"), by and among Holdings, Burger BossCo, the lenders from time to time party to the Second Lien Credit Agreement (the "Second Lien Lenders"), and Wilmington Trust, National Association, as administrative agent and collateral agent for the Second Lien Lenders. Checkers obtained consents to the Out-of-Court Restructuring from all of the First Lien Lenders and all of the Second Lien Lenders and consummated the Out-of-Court Restructuring on June 16, 2023, whereby Burger BossCo and its subsidiaries were deconsolidated from BossCo Holdings, newly issued equity of Burger BossCo was issued to Checkers Topco, LLC ("Topco"), the secured creditors of Holdings and Burger BossCo acquired all of the equity of Topco, and the equity of Burger BossCo owned by BossCo Holdings was repurchased by Burger BossCo for a nominal amount.
As part of the Out-of-Court Restructuring, each First Lien Lender was provided with the right to elect to provide up to pro rata share of commitments to make $25 million in "First-Out Delayed Draw Term Loans" ("New Money Loans") under that certain Credit Agreement, dated as of June 16, 2023 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement" and such commitments, the "New Money Commitments"), by and among Holdings, CDI, Burger BossCo, the persons party thereto from time to time as "Lenders" thereunder, and Jefferies Finance LLC, as the administrative agent and the collateral agent for such lenders. The New Money Loans accrue interest at a floating rate, which can be, at the Company's option, (x) an alternative base rate plus 6.00% per annum or (y) the Adjusted Term Secured Overnight Financing Rate plus 7.00% per annum plus a credit adjustment spread. The Company has the option to pay interest on the New Money Loans that has accrued at a rate equal to 4.00% per annum in kind, rather than in cash. The New Money Loans mature on June 16, 2027. Additionally, the Company is required to make recurring quarterly principal payments on the New Money Loans in the amount equivalent to 0.25% of the original principal amount which may increase upon additional borrowings.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, BossCo Holdings deconsolidated Burger BossCo and its subsidiaries, including Checkers, on June 16, 2023, due to an out-of-court restructuring of Burger BossCo's capital structure. This restructuring was initiated on June 5, 2023, by Burger BossCo, Holdings, CDI, and their affiliates.
The restructuring involved obtaining consents from holders of loans under the First Lien Credit Agreement and the Second Lien Credit Agreement. After securing these consents, the Out-of-Court Restructuring was consummated. As a result, newly issued equity of Burger BossCo was issued to Checkers Topco, LLC, and the secured creditors of Holdings and Burger BossCo acquired all of the equity of Topco. Additionally, the equity of Burger BossCo owned by BossCo Holdings was repurchased by Burger BossCo for a nominal amount.
For a potential Checkers franchisee, this deconsolidation and restructuring means that the financial statements are presented in two distinct periods: "Predecessor" (prior to June 16, 2023) and "Successor" (subsequent to June 16, 2023). The FDD notes that these periods are not necessarily comparable due to changes in the accounting basis of assets and liabilities resulting from the restructuring. This could impact how a franchisee analyzes the financial performance of Checkers before making an investment decision.
The FDD also indicates that prior to the Out-of-Court Restructuring, BossCo Holdings filed consolidated federal and state income tax returns, which included Checkers. After the restructuring, Burger BossCo files consolidated federal and state income tax returns, which include Checkers. This change in tax filing structure could have implications for how Checkers manages its income taxes and reports its financial performance.