After the Hamburg chain paid off the debts it incurred to avoid bankruptcy, Steak’n Shake Inc. sued the lender Fortress Investment Group LLC, accusing Fortress of misusing confidential information to initiate a takeover offer.
With the support of entrepreneur Sardar Biglari, the Indiana-based milkshake and burger chain stated that Fortress had obtained sensitive information through negotiations with Steak’n Shake in a potential real estate transaction, and then used This knowledge established a $89 million position in the company. loan.
The pandemic prompts the steak to “shake it”
The complaint stated that after obtaining the loan, Fortress made it clear that it “will not accept the negotiated repayment” and that it “will force the company to repay the loan in full or file for bankruptcy.”
The company said that Steak’n Shake repaid the loan in full on Friday, spending nearly $103 million to repay debts and avoid filing for bankruptcy.
Steak’n Shake’s lawsuit was filed in the Marion County Superior Court of Indiana on Friday, with the purpose of making up for the damage caused by the Fortress operation.
Fortress did not immediately respond to a request for comment.
Steak’n Shake has been working hard to deal with the impact of the COVID-19 pandemic on the catering industry, transitioning from a table service model to self-service. In order to fund the transition period and combat the pandemic, the company explored the sale of a portfolio of 15 real estate properties last year.
Fortress expressed its intention to purchase these properties and signed a confidentiality agreement to obtain information about these properties. However, this investment company did not do any real estate transactions, but started to purchase part of Steak’n Shake’s loan from other investors, and eventually left more than 50% of the balance.
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Steak’n Shake said that management “believes that they are providing this information to potential counterparties in real estate transactions rather than condor investors” and they are trying to seize control by forcing the company to go bankrupt.
The company has been buying some loans on the open market at discounted prices from other investors for several months. The lawsuit said, but as the loan maturity date approaches in March, Fortress said it will accept the loan amount not less than the full value. Lenders generally do not need to repay in full.
Steak’n Shake said that the information about 15 properties provided to Fortress allows the investment company to infer the total value of the company’s real estate and other details related to the value of Steak’n Shake, which is important for anyone intending to purchase the property. All are very useful. the company.
The company has been preparing for possible restructuring and has hired legal and financial advisors to conduct out-of-court restructuring or file for bankruptcy.
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The history of Steak’n Shake can be traced back to the burger stand established in 1934. Before Mr. Biglari took control in 2008, it underwent a series of major investments by owners and major investments to expand operations throughout the United States and abroad.