BurgerFi International lost another board member and the company’s stock is in danger of a delisting, the company said in an SEC filing late last week.
The Fort Lauderdale, Florida-based owner of the burger chain BurgerFi and Anthony’s Coal-Fired Pizza has received a notice from the Nasdaq stock exchange threatening to delist the company’s shares.
The notice cited BurgerFi’s inability to timely file its second-quarter report. It also said that the company does not have enough members of its board of directors.
Four people have resigned from BurgerFi’s board of directors over the past two weeks. That includes Andrew Taub, who resigned last week. Taub is a managing director of L Catterton, the private-equity firm that sold Anthony’s to BurgerFi in 2021 and, as a result, became a major shareholder.
The company has appointed two board members amid the resignation, Michael Epstein and David Gordon, each of which is being paid $15,000 per month.
Delisting is a tough spot for public companies because it means they would trade over the counter, meaning they can only be bought or sold through a broker. That makes it more difficult for companies to generate interest in the shares.
Yet that’s likely among the least of BurgerFi’s concerns at the moment. The company’s finances have been under growing pressure over the past two years amid brutal sales and high costs.
The company is in the midst of a sale process that will likely result in lenders taking over the restaurant chains. Jeff Crivello, the former CEO of Famous Dave’s, has acquired the debt held by BurgerFi.
The company hired a chief restructuring officer last month. Such officers typically guide companies through restructuring processes, including bankruptcy filings.
Earlier, BurgerFi warned investors that it faced “significant adverse developments” that have deepened its financial problems and made a bankruptcy filing a real possibility. That filing said the company had a net loss of $18.4 million in the second quarter.
By contrast, the company lost $6 million a year earlier and $6.5 million in the first quarter of this year.
BurgerFi is one of several companies that have either filed for bankruptcy or are close to it. These companies are struggling with some combination of weak sales, rising costs, excessive leverage and a difficult financing environment.
Seventeen companies have filed for bankruptcy. Others avoided such steps out of court, such as Freebirds World Burrito and MOD Pizza, as investors buy up the debt, and lenders and private-equity owners walk away from the deals.
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