When did Checkersrallys complete the Out-of-Court Restructuring after the March 2023 default?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
On March 6, 2023, the Company failed to make a required interest payment which resulted in an event of default under the terms of the Senior Credit Facility. Upon an event of default, the Senior Credit Facility lenders may declare all amounts outstanding under the Senior Credit Facility due and payable. Upon notification of the event of default, the Company and the Senior Credit Facility lenders entered into a forbearance agreement that provided the Company, through June 20, 2023, a temporary waiver from paying the interest and principal amounts due under the Senior Credit Facility and an opportunity for the Company and lenders to negotiate a potential out-of-court restructuring transaction. The forbearance agreement would terminate on June 20, 2023, and absent a successful transaction all remedies under the Senior Credit Facility would become available to the lenders, including the right to demand payment of the outstanding obligations. Due to the event of default and cross default provisions in other facilities and the waiver expiring less than 12 months from the balance sheet date, all outstanding obligations under the Senior Credit Facility were reclassified from non-current to current at January 2, 2023. The Company completed the Out-of-Court Restructuring on June 16, 2023.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the company completed its Out-of-Court Restructuring on June 16, 2023. This restructuring followed a default event on March 6, 2023, when Checkersrallys failed to make a required interest payment under its Senior Credit Facility. This led to a forbearance agreement with lenders, providing a temporary waiver until June 20, 2023, to negotiate the restructuring.
The successful completion of the Out-of-Court Restructuring resulted in a Credit Agreement that determined the new debt amount between the existing lenders and Checkersrallys. The First Lien lenders had the option to contribute to new delayed draw term loans, receiving varying pro rata equity shares of Topco, the new parent company. The Second Lien was completely exchanged for a pro rata share of Topco's equity.
For a potential Checkersrallys franchisee, this restructuring is significant because periods prior to June 16, 2023, are considered "Predecessor" financial statements, while periods after this date are labeled "Successor." The Out-of-Court Restructuring led to a change in control, requiring Checkersrallys to apply pushdown accounting, recording assets and liabilities at their fair values. This means that the financial statements before and after this date are not directly comparable, which could impact how a franchisee assesses the financial health and performance of the company.