Fatburger Owner Faces Allegations It Masked Liquidity Crunch

One of FAT Brands Inc.’s shareholders is suing the restaurant-chain owner for allegedly hiding the true extent of its debt amid a darkening financial outlook that saw its stock hit a multiyear low this week.

The company, which owns Fatburger and Johnny Rockets, resorted to high-interest loans known as merchant cash advances as its finances deteriorated, according to a pair of complaints filed in Delaware Chancery Court since late November. The shareholder accuses FAT Brands of misrepresenting debt as cash to try to win fresh financing.

The MCAs, together with other transactions that were “designed to artificially inflate its ...