How was the Second Lien Loan handled in the Out-of-Court Restructuring for Checkersrallys?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
ditionally, the Second Lien was completely exchanged in
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
favor of a pro rata share of Topco's equity. As a result, the Company's new parent became Topco which is owned by the Lenders of the previously held First and Second Liens.
The terms of the repayment of the debt outstanding under the Agreement called for the restructuring of the First Lien Loan into up to $25 million in New Money Loans and $75 million in Second Out Loans plus the issuance of 40% and 55% equity in Topco, respectively. We note that at the time of the restructuring, only $10 million in New Money Loans was issued. Additionally, the restructuring resulted in the complete cancellation of the Second Lien Loan in exchange for the issuance of 5% equity in Topco.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the Second Lien Loan was completely cancelled in exchange for the issuance of 5% equity in Topco during the Out-of-Court Restructuring. This restructuring, which Checkersrallys consummated on June 16, 2023, involved soliciting consents from holders of both First and Second Lien Loans.
The document further clarifies that Burger BossCo Debt Holdings, LP, as a Second Lien Lender, exchanged its Second Lien Loans for its pro rata share of 5% of the equity of Topco. This means that instead of holding debt, the lenders became equity holders in the newly structured company, Topco.
This exchange was part of a broader effort to restructure the debt and equity of Burger BossCo, with the secured creditors of Holdings and Burger BossCo acquiring all of the equity of Topco. The equity of Burger BossCo, previously owned by BossCo Holdings, was repurchased by Burger BossCo for a nominal amount as part of this restructuring.