What was the reported total assets for Checkers after the Out-of-Court Restructuring?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
As a result of the Out-of-Court Restructuring as further discussed below and in Note 4. Business Combination, periods prior to June 16, 2023 reflect the financial statements of CDI prior to the Out-of-Court Restructuring, (referred to herein as "Predecessor"). The period subsequent to June 16, 2023 reflects the financial statements of CDI after the Out-of-Court Restructuring (referred to herein as "Successor"). As the Out-of-Court Restructuring resulted in a change in control of CDI's parent, the Company elected to apply pushdown accounting, thus assets and liabilities were recorded at their fair values at the date of the Out-of-Court Restructuring. Due to the changes in the accounting basis of assets and liabilities, the Successor and Predecessor financial statements are not necessarily comparable. Where applicable, a black line separates the Successor and Predecessor periods to highlight the lack of comparability.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
I am unable to provide the exact figure for Checkers' total assets after the Out-of-Court Restructuring, as the provided excerpts from the 2025 Franchise Disclosure Document do not include a consolidated balance sheet or a statement of financial position that details the specific asset values. However, the FDD does discuss the accounting treatment and valuation methods used following the restructuring.
Specifically, the 2025 FDD explains that due to the Out-of-Court Restructuring completed on June 16, 2023, the company applied 'pushdown accounting.' This means that the assets and liabilities were recorded at their fair values as of the date of the restructuring. The document mentions that a third-party valuation specialist determined the fair value of the stock consideration using market and income approaches. Furthermore, the fair values of tradenames and franchise agreements were determined using the relief from royalty and the income approach, respectively. These valuations incorporate significant unobservable inputs and require considerable judgment and estimates, including the amount and timing of future cash flows.
For a prospective Checkers franchisee, this means that the reported asset values reflect fair market assessments made at the time of the restructuring. However, without the actual balance sheet figures, it is impossible to determine the precise total asset value. A potential franchisee should request the complete financial statements, including the balance sheets for the periods before and after the Out-of-Court Restructuring, to fully understand the company's financial position and the impact of the restructuring on its assets and liabilities. Understanding these figures is crucial for assessing the financial health and stability of Checkers.