Consolidated Burger Holdings was formed in 2018 specifically to acquire a portfolio of underperforming Burger King restaurants in a transaction facilitated by Restaurant Brands International, Burger King's parent company. The June 2018 acquisition brought 66 Burger King locations in Florida and Georgia under CBH management for $45.5 million—units that RBI considered struggling and in need of transition under new ownership.
Company profile and initial expansion. Headquartered in Destin, Florida, CBH described itself as a multi-branded quick service restaurant operating company with growth through new restaurant development and acquisitions. The company's principal, Lee M. Baugher, led a strategy that expanded the portfolio to 75 locations with approximately 1,500 employees at peak operations. CBH invested approximately $30 million post-acquisition in improvements and remodels, including seven new builds and nine full renovations, to bring acquired units up to brand standards.
Portfolio contraction. By the petition date, the company operated 57 restaurant locations across Florida and Georgia, after closing 18 restaurants. The remaining portfolio comprised 53 traditional stand-alone units and four Walmart outlets, employing 773 workers—76 salaried and 697 hourly. This workforce was about half of the company's peak employment.
Debtor entities. The jointly administered chapter 11 cases include three related entities: Consolidated Burger Holdings, LLC (Case No. 25-40162) as the lead case, along with Consolidated Burger A, LLC (Case No. 25-40160) and Consolidated Burger B, LLC (Case No. 25-40161). Consolidated Holdings held 100% of the equity interests in both operating subsidiaries, with the consolidated estate structure facilitating the sale process and claims administration.
The financial deterioration that led to CBH's bankruptcy filing reflected pandemic impacts, industry cost pressures, and franchisor relations.
Revenue decline and operating losses. The company's fiscal 2024 sales of $67 million represented a 12.5% decline from $76.6 million in fiscal 2023, and operating losses increased. The net operating loss nearly doubled from $6.3 million to $12.5 million over the same period.
COVID-19's impact. Court filings emphasized that the business suffered from loss of foot traffic through the COVID-19 pandemic, with revenue not recovering to pre-pandemic levels. Rental obligations, debt service, and other fixed liabilities remained largely unchanged, and the company used liquidity to cover those costs.
Industry cost environment. CBH's challenges occurred against a backdrop of industry cost pressures. Food and labor costs climbed more than 30% since 2019, with nearly all QSR operators (96%) citing labor as a major challenge and 95% pointing to food costs and inflation. Menu prices had risen over 28% since early 2020 in an attempt to offset these increases, but typical restaurant margins remained in the 3-5% range before taxes. Specific commodity pressures included beef prices up 13.9% year-over-year and egg prices up 10.9% in 2024, impacting core menu item costs for burger-focused operations.
Liquidity crisis. By the petition date, CBH had only $179,000 in unrestricted cash, insufficient to fund operations without external financing. The company relied on the chapter 11 filing and the DIP financing arrangement to fund the sale process.
A central factor in CBH's bankruptcy was its conflict with Burger King Corporation over mandatory remodel requirements under the "Reclaim the Flame" program, a dispute that progressed from negotiation to litigation and franchise agreement defaults over an 18-month period.
Reclaim the Flame program structure. Burger King announced the "Reclaim the Flame" plan in September 2022, committing $150 million in advertising and digital investments ("Fuel the Flame") plus $250 million for remodels, relocations, technology, and building enhancements ("Royal Reset"). The initiative targeted 85-90% of the U.S. system reaching the modern image by 2028. While the program included franchisor co-investment, the capital requirements created obligations for franchisees.
Escalating remodel commitments. The initial $400 million Reclaim the Flame program was expanded with an additional $300 million commitment to accelerate U.S. remodels through 2028. Remodeled locations delivered mid-teens year-one sales uplifts, with "A" operators achieving average profitability exceeding $275,000 compared to $205,000 system-wide.
Litigation escalation. The remodel dispute led to lawsuits between CBH and Burger King. CBH initiated litigation in November 2023, alleging breach of prior agreements related to the remodel requirements. Burger King filed its own lawsuit on January 16, 2024, asserting that CBH had failed to complete required restaurant remodels under the Royal Reset program.
Settlement and subsequent defaults. The parties reached a confidential settlement in September 2024. On February 20, 2025, Burger King declared alleged defaults under all CBH franchise agreements based on remodel requirements. Burger King agreed to forbear multiple times from exercising termination rights, but the forbearance period ended on April 14, 2025. CBH filed chapter 11 on that date to pursue a going-concern sale.
Franchisor actions in the system. RBI's response included the franchisor spending $1 billion to acquire Carrols Restaurant Group, its largest franchisee, in 2024, with a $500 million remodel commitment for those stores.
Before filing chapter 11, CBH conducted a seven-month marketing process seeking a buyer or investor willing to acquire the restaurant portfolio outside of bankruptcy. The process, conducted with professional assistance, contacted potential acquirers including other Burger King franchisees, private equity investors with restaurant holdings, and strategic buyers seeking Florida and Georgia market entry.
Process structure and outreach. The prepetition marketing effort sought to transfer the restaurant portfolio to a well-capitalized buyer capable of meeting franchisor requirements and investing in operations.
Failure to produce executable transaction. Despite the extended marketing effort, no executable transaction materialized during the prepetition period. The marketing effort, combined with Burger King's impending termination of franchise agreements, led to the bankruptcy filing to preserve going-concern value. The chapter 11 process allowed 363 sales, assumption and assignment of leases, and cure of defaults to transfer the business to CKJ Burger.
| Category | Amount |
|---|
| Total Prepetition Debt | ~$36,640,000 |
| Auxilior Secured Facility | ~$14,040,000 |
| Subordinated Credit Facility | ~$13,230,000 |
| Management Agreement Debt | ~$3,000,000 |
| General Unsecured Trade Payables | ~$3,800,000 |
| 2022 Subordinated Note | $868,125 |
| Southfield Note | $349,267 |
| Union Capital Note | $349,267 |
| Total Assets | ~$77,900,000 |
| Total Liabilities | ~$77,900,000 |
Auxilior senior secured facility. The prepetition secured facility was entered on December 30, 2022, with Auxilior Capital Partners, Inc.—a Plymouth Meeting, Pennsylvania-based independent finance company specializing in inventory financing and leasing services for franchise, construction, and healthcare industries. The facility provided up to $17.25 million in aggregate principal, secured by substantially all assets of Consolidated Holdings, Consolidated A, and Consolidated B. By the petition date, approximately $14.04 million remained outstanding (including capitalized and accrued/unpaid interest), with original maturity scheduled for January 15, 2029.
Subordinated and unsecured obligations. Below the Auxilior secured debt, CBH carried subordinated and unsecured obligations totaling over $21 million. The subordinated credit facility ($13.23 million) represented the largest unsecured claim, followed by management agreement debt ($3 million) and general trade payables ($3.8 million). Smaller notes held by Southfield Mezzanine Capital, Union Capital, and a 2022 subordinated note rounded out the unsecured creditor pool.
| Term | Details |
|---|
| DIP Lender | Auxilior Capital Partners, Inc. |
| DIP Amount | $1,600,000 (new money) |
| Interim Order | April 22, 2025 |
| Final Order | May 9, 2025 |
| Purpose | Working capital, operating expenses, sale process funding |
Prepetition lender as DIP provider. Auxilior Capital Partners, the prepetition secured lender, provided the $1.6 million DIP facility. The DIP financing was structured to fund working capital needs, operating expenses, and the costs of conducting the 363 sale process.
U.S. Trustee objection. The U.S. Trustee filed an objection to the DIP financing on April 25, 2025, raising concerns about the financing terms.
Southfield Mezzanine Capital objections. Southfield Mezzanine Capital, a subordinated unsecured creditor holding approximately $349,000 in notes, objected to multiple aspects of the case. Southfield filed objections to the DIP financing, the bidding procedures, and the retention of Peak Franchise Capital as investment banker.
Final DIP approval. Despite the objections, the court entered the Final DIP Order on May 9, 2025, approving the $1.6 million facility to fund operations through the sale process.
Bidding procedures. The debtors filed their Bidding Procedures Motion on April 17, 2025, three days after the petition date. CKJ Burger, LLC was designated as the stalking horse bidder, with Akerman LLP serving as counsel to the proposed acquirer. The stalking horse arrangement provided a floor price for the assets while allowing competitive bidding if other parties emerged during the marketing process.
Investment banker retention. Peak Franchise Capital, LLC was retained as the debtors' investment banker, with retention approved on May 1, 2025. Peak Franchise Capital conducted the bankruptcy marketing process. The firm filed its fee application on July 8, 2025, which the court approved on August 5, 2025.
Multiple sale orders. The 363 sale process resulted in multiple sale orders entered over a two-week period in June 2025:
| Docket | Date | Transaction |
|---|
| Dkt. 270 | June 13, 2025 | APA approval (first tranche) |
| Dkt. 271 | June 17, 2025 | APA approval (second tranche) |
| Dkt. 272 | June 17, 2025 | APA approval (third tranche) |
| Dkt. 300 | June 26, 2025 | CKJ Burger primary sale order |
| Dkt. 301 | June 26, 2025 | Lease rejection authorization |
Sale structure and franchisor consent. The 363 sales closed free and clear of liens, claims, and encumbrances, with CKJ Burger acquiring the franchise operations subject to Burger King Corporation's consent to the transfer. Franchisor consent was a closing condition for the transaction.
Lease assumptions and rejections. The court authorized assumption and assignment of designated leases to CKJ Burger, enabling the buyer to continue operating at the acquired locations. Simultaneously, the court authorized rejection of leases for locations not included in the Lease Rejection Order, allowing the debtors to shed real estate obligations.
Post-sale relief from stay. On July 3, 2025, the court granted Auxilior Capital Partners' motion for relief from stay, allowing Auxilior to exercise remedies with respect to any remaining collateral not transferred in the sales.
Exclusivity extensions. Following the June 2025 sale closings, the debtors twice extended their exclusive periods for filing a plan and soliciting acceptances:
The exclusivity extensions indicate ongoing work to resolve remaining claims before proposing a chapter 11 plan.
Omnibus claims objections. In December 2025, the debtors filed an extensive series of omnibus claims objections seeking to reduce and reconcile filed claims before proposing distributions:
| Objection | Docket | Date Filed |
|---|
| First Omnibus | Dkt. 396 | December 10, 2025 |
| Second Omnibus | Dkt. 397 | December 10, 2025 |
| Third Omnibus | Dkt. 398 | December 10, 2025 |
| Fourth Omnibus | Dkt. 399 | December 10, 2025 |
| Fifth Omnibus | Dkt. 400 | December 10, 2025 |
| Sixth Omnibus |
The volume of claims objections reflects a post-sale claims reconciliation process, where debtors seek to resolve or disallow filed claims before proposing a distribution scheme.
Xenial settlement. On December 18, 2025, the court approved a settlement and mutual release with Xenial, Inc., resolving claims between the parties. Xenial provides point-of-sale and restaurant technology solutions.
Plan status. As of late December 2025, no chapter 11 plan has been filed. The primary value realization occurred through the sale process, with remaining case administration focused on claims reconciliation and distribution of any available proceeds.
| Date | Event |
|---|
| June 2018 | Acquired 66 Burger King locations for $45.5 million |
| September 2022 | Burger King launches "Reclaim the Flame" program |
| December 2022 | Entered Auxilior Loan Facility ($17.25M capacity) |
| November 2023 | CBH sues Burger King alleging breach of agreements |
| January 16, 2024 | Burger King files countersuit against CBH |
| September 28, 2024 | Confidential settlement reached with Burger King |
| February 20, 2025 | BKCo declares defaults under all Franchise Agreements |
| April 14, 2025 | Chapter 11 petitions filed (forbearance expires) |
| April 15, 2025 | First Day Declaration filed |
| April 17, 2025 | Bidding Procedures Motion filed |
| April 22, 2025 | Interim DIP Order entered |
| April 25, 2025 | U.S. Trustee objection to DIP filed |
| April 28, 2025 | Southfield Mezzanine objections filed |
| May 1, 2025 | Berger Singerman, Peak Franchise Capital retentions approved |
| May 9, 2025 | Final DIP Order entered |
| June 13, 2025 | First sale order entered |
| June 17, 2025 | Additional sale orders entered |
| June 26, 2025 | CKJ Burger primary sale order entered |
| July 3, 2025 | Auxilior relief from stay granted |
| September 15, 2025 | First exclusivity extension granted |
| October 31, 2025 | Second exclusivity extension granted |
| December 10, 2025 | Omnibus claims objections 1-10 filed |
| December 18, 2025 |
| Professional | Role | Retention/Fee Order |
|---|
| Berger Singerman LLP (Jordi Guso) | Debtors' Counsel | Dkt. 134 (May 1, 2025) |
| Development Specialists, Inc. (Joseph J. Luzinski) | Financial Advisor / CRO | Dkt. 67 (April 18, 2025) |
| Peak Franchise Capital, LLC | Investment Banker | Dkt. 135 (May 1, 2025) |
| Omni Agent Solutions, Inc. | Claims and Noticing Agent | Dkt. 48 (April 16, 2025) |
| KSM Business Services | Accountants | (June 10, 2025) |
Berger Singerman LLP, a Florida-based firm with more than 100 attorneys and offices across the state, served as lead bankruptcy counsel. The firm's Business Reorganization Team includes two former Chief Bankruptcy Judges. Development Specialists, Inc. served as financial advisor and provided Joseph J. Luzinski as Chief Restructuring Officer, the signatory on the First Day Declaration that detailed the circumstances leading to the filing.
Burger King Franchisee Distress: Industry Context
CBH's bankruptcy reflects a broader pattern of Burger King franchisee distress that emerged in 2023 and has persisted through 2025.
2023 franchisee bankruptcies. The year 2023 was challenging for Burger King operators, with a handful of large franchisees filing bankruptcy including Meridian Restaurants Unlimited, Toms Kings, and Premier Kings. These filings shared common characteristics: operators who had taken on significant debt to acquire or expand portfolios were unable to service those obligations while meeting the capital requirements of the Reclaim the Flame remodel program.
Remodel economics and operator stratification. Burger King's remodel program showed results for operators with the capital to execute—completing 370 remodels in 2024 and passing the 51% mark for the program. Remodeled locations open for over six months delivered mid-teens year-one sales uplifts, with "A" operators achieving average profitability exceeding $275,000 compared to $205,000 system-wide. The results highlighted the gap between well-capitalized operators who could invest in remodels and undercapitalized operators who could not.
Franchisor capital deployment. Restaurant Brands International's acquisition of Carrols Restaurant Group for $1 billion in 2024, with a $500 million remodel commitment for those stores and an additional $300 million co-investment in remodels, reflected franchisor involvement in modernization. The consolidation strategy addressed the capital needed for remodels and transitions to better-capitalized franchisees.
Consumer behavior and competitive dynamics. The QSR environment included shifts in consumer behavior. Industry research found that 95% of restaurant operators reported guests were more conscious of value than before, with more than half introducing new discounts, deals, or promotions to maintain traffic. A "class-line trade down" phenomenon saw consumers moving to lower-priced segments within QSR, creating pressure on pricing power when operators needed to raise prices to offset rising costs. This environment made it difficult for struggling franchisees to recover through operational improvements alone.
What caused Consolidated Burger Holdings to file bankruptcy?
Multiple factors contributed to CBH's chapter 11 filing. The most immediate cause was Burger King's declaration of defaults on all franchise agreements on February 20, 2025, based on CBH's failure to complete required remodels under the Reclaim the Flame program. Underlying this was a deteriorating financial position: revenue declined from $76.6 million to $67 million while operating losses nearly doubled from $6.3 million to $12.5 million between fiscal 2023 and fiscal 2024. COVID-19's impact on foot traffic, combined with industry-wide cost inflation exceeding 30% since 2019, reduced margins as debt service continued. By the petition date, CBH had only $179,000 in unrestricted cash, making continued operations dependent on DIP financing.
Who acquired the Burger King locations?
CKJ Burger, LLC served as the stalking horse bidder and acquired the restaurant portfolio through a 363 sale process. Multiple sale orders were entered between June 13 and June 26, 2025. Akerman LLP represented CKJ Burger in the transaction. The sale required Burger King Corporation's consent to the transfer, which was obtained as a condition to closing.
What is the "Reclaim the Flame" program that led to the franchisor dispute?
Burger King launched the Reclaim the Flame program in September 2022, committing $150 million in advertising and digital investments ("Fuel the Flame") plus $250 million for remodels, relocations, technology, and building enhancements ("Royal Reset"). The initiative aimed to modernize 85-90% of the U.S. restaurant base by 2028. While the program included franchisor co-investment, franchisees bore capital requirements to participate. The $400 million initial commitment was expanded by an additional $300 million. Remodeled locations demonstrated mid-teens sales uplifts, but the capital requirements were not feasible for overleveraged operators like CBH.
How much did CBH owe at filing?
Total liabilities approximated $77.9 million. The capital structure included approximately $14.04 million in secured debt owed to Auxilior Capital Partners under a senior facility entered in December 2022. Unsecured obligations totaled approximately $21.6 million, comprising a $13.23 million subordinated credit facility, $3 million in management agreement debt, $3.8 million in trade payables, and smaller notes held by Southfield Mezzanine Capital, Union Capital, and a 2022 subordinated note. Total assets were also listed at approximately $77.9 million.
Is CBH part of a broader Burger King franchisee bankruptcy wave?
Yes. Multiple large Burger King franchisees filed bankruptcy in 2023-2024, including Meridian Restaurants Unlimited, Toms Kings, and Premier Kings. These filings shared common characteristics: operators with significant acquisition debt who could not simultaneously service those obligations and fund mandatory Reclaim the Flame remodels. The pattern reflected a mismatch between the capital requirements of franchisor modernization programs and the financial capacity of mid-sized, leveraged operators, particularly those whose revenues were still recovering from pandemic impacts.
What is the current status of the chapter 11 case?
As of late December 2025, no chapter 11 plan has been filed. The 363 sale to CKJ Burger closed in June 2025, with subsequent case administration focused on claims reconciliation. The debtors have twice extended exclusivity and have filed eleven omnibus claims objections seeking to reduce and reconcile filed claims before proposing distributions. The Xenial settlement approved in December 2025 resolved one significant dispute. A settlement motion with Union Capital Equity Partners II was filed December 29, 2025, with a hearing scheduled for February 11, 2026.
Who is the claims agent for Consolidated Burger Holdings?
Omni Agent Solutions, Inc. served as the claims and noticing agent for the Consolidated Burger Holdings bankruptcy cases (Case No. 25-40162, jointly administered). The cases were filed in the U.S. Bankruptcy Court for the Northern District of Florida, Pensacola Division, before Judge Karen K. Specie. The 363 sale to CKJ Burger closed in June 2025, with the case remaining open for claims reconciliation.
How did industry cost conditions contribute to CBH's failure?
The QSR industry faced cost pressures that eroded franchisee margins. Food and labor costs climbed more than 30% since 2019, with beef prices up 13.9% year-over-year and egg prices increasing 10.9% in 2024. Menu prices rose over 28% since early 2020 in an attempt to offset these increases, but typical restaurant margins remained in the 3-5% range before taxes. For CBH, these cost increases meant that declining revenue produced larger operating losses, as fixed costs could not be reduced proportionally. The combination of revenue shortfall and cost inflation contributed to the liquidity crisis.
Why did the prepetition marketing process fail?
CBH conducted a seven-month marketing process before filing bankruptcy, seeking a buyer willing to acquire the portfolio outside of court. The process did not produce an executable transaction for several reasons: potential buyers faced uncertainty over lease treatment and the ability to assume favorable leases without bankruptcy mechanisms; the franchise agreement defaults gave Burger King termination rights that created deal risk; and the distressed posture of the company limited buyer interest. The bankruptcy filing provided the legal tools—363 sales, assumption and assignment of leases, cure of defaults—that enabled the CKJ Burger transaction to close in a manner the prepetition process could not achieve.
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