Steak ‘n Shake sues lender Fortress after avoiding bankruptcy

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Steak ‘n Shake Inc. is suing Fortress Investment Group in Indiana court, accusing the investment firm of abusing confidential business information in a scheme to take control of the restaurant chain’s assets.

Fortress obtained financial information on Steak ‘n Shake in mid-2020 during negotiations for a possible real estate deal, then used that knowledge to inform an attempted purchase of the company’s loans, force it into bankruptcy, and acquire the channel via a so-called credit. offer, the lawsuit alleges.

Representatives for Steak ‘n Shake and Fortress did not respond to requests for comment.

After real estate negotiations began, Fortress and its subsidiaries purchased more than half of Steak ‘n Shake’s senior loan due in March 2021, a position with a face value of approximately $ 89 million. He then threatened to use the majority position to force Steak ‘n Shake out of business, according to the company’s complaint.

Fortress’s plan, according to the company, then was to use its rights as the majority owner of the loan to buy down the real estate that served as collateral for the debt. These properties included those considered during the 2020 negotiations.

Steak ‘n Shake and his advisers were prepare the potential filing of chapter 11 earlier this month, Bloomberg previously reported, as the company attempted to negotiate the repayment with Fortress. The restaurant chain finally paid $ 102 million get into debt, according to the record.

The restaurant company is suing Fortress for damages related to its takeover attempt.

“This program has cost Steak ‘n Shake millions of dollars and countless hours of management attention at a critical time,” the complaint said. “Fortress must be held responsible for its violation and bad faith conduct.”

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