What was the reported fair value of Checkers' intangible assets after the Out-of-Court Restructuring?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
As described in Note 1 due to the Out-of-Court Restructuring the Company compared the fair value of the asset with its carrying amount and recognized an impairment in the period from January 3, 2023 through June 16, 2023 (Predecessor) as described within Note 9. As the brands intangible asset and goodwill were recognized at fair value as part of the Out-of-Court Restructuring, the Company subsequently performed a qualitative assessment to determine whether these assets were more likely than not impaired as of the first day of the last fiscal quarter of both Successor fiscal year and period. If the Company concludes that the assets are more likely than not impaired, the Company will perform a quantitative test to determine the amount of impairment, if any, to recognize. In making this determination, the Company considered several factors provided by U.S. GAAP, including the Company's performance. By evaluating these factors, the Company determined that these assets are not more likely than not impaired in the Successor periods.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the company recognized the brand's intangible assets and goodwill at fair value as part of the Out-of-Court Restructuring. Following this, Checkers performed a qualitative assessment to determine if these assets were likely to be impaired as of the first day of the last fiscal quarter for both the Successor fiscal year and period.
To determine impairment, Checkers considered factors provided by U.S. GAAP, including the company's performance. After evaluating these factors, Checkers determined that the intangible assets were not more likely than not impaired in the Successor periods.
While the FDD mentions that the intangible assets were recognized at fair value, it does not provide the specific dollar amount of that fair value. A prospective franchisee should ask Checkers for the specific fair value of the intangible assets recognized after the Out-of-Court Restructuring to gain a clearer understanding of the company's asset valuation.