April 13, 2026 - Office Properties Income Trust, FAT Brands, Axip Energy Services, BlockFills

This episode covers key developments in four major restructuring and bankruptcy cases:

Office Properties Income Trust heads toward confirmation of its $2.4 billion restructuring, following extensive intercreditor disputes and a series of settlements that stabilized enterprise value and reduced leverage through conversion of its DIP facility into equity, leaving unsecured noteholders with modest recoveries and wiping out existing equity.

FAT Brands enters the final phase of its Chapter 11 sale process after resolving a high-profile governance battle, with bids due April 24th and lenders positioned to credit bid nearly $1 billion in debt if no third-party offers emerge.

Axip Energy Services completes a $161 million Section 363 sale in just 43 days, one of the fastest recent processes in the Southern District of Texas, though the outcome leaves unsecured creditors and junior stakeholders facing little to no recovery.

And BlockFills, a digital asset brokerage, advances a dual-track restructuring strategy combining a potential customer-led NewCo transaction with a court-supervised sale, as the case centers on whether customer crypto assets constitute property of the estate.

💡 From distressed office real estate and franchise governance battles to rapid asset sales and crypto restructuring frameworks, this episode explores how speed, stakeholder negotiations, and emerging legal questions are shaping outcomes across today’s Chapter 11 landscape.

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Transcript

Outro

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Welcome to Stretto's Restructuring Report, a podcast featuring notable stories curated by professionals and powered by Stretto Intelligence. Join us each week for highlights, updates, and news impacting restructuring professionals. And dig deeper into research and analysis online using Research Suite by Stretto. Now enhance by AI to make it easier for professionals to find, review, and understand information that matters most. Visit researchsuite.stréto.com to learn more.

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To begin, Office Properties Income Trust is heading into the final stretch of its Chapter 11 reorganization in Houston, with a confirmation hearing scheduled for April 22nd. The Maryland-based Real Estate Investment Trust, which owns more than 120 office properties across 29 states and Washington, D.C., filed for bankruptcy last October, carrying approximately $2.4 billion in funded debt and just $29 million in available cash against $1.1 billion in near-term maturities. The case has been defined by aggressive intercreditor warfare, three rounds of mediation, and a series of interlocking settlements that ultimately resolved the principal disputes. A global settlement framework fixed the contested 2027 notes claim at $385 million, resolving two adversary proceedings, while a separate committee settlement enhanced unsecured creditor recoveries and increased the plan's enterprise value to $1.75 billion. On April 5th, the debtors elected to convert their $125 million debtor in possession facility into reorganized equity rather than requiring cash repayment, reducing post-emergence leverage. If confirmed as proposed, the reorganized entity would emerge with approximately $1.46 billion in debt and an enterprise value of roughly $2 to $2.25 billion, with the September 2029 noteholders becoming the dominant equity holders of a private REIT, navigating the structural headwinds of the post-pandemic office market. Unsecured noteholders holding roughly $491 million in claims face recoveries of just 4.4 to 7%. Existing equity is wiped out. Next, the Chapter 11 cases of Fat Brands, the multi-brand restaurant franchise, or behind 18 brands in approximately 2,200 locations worldwide, have moved from governance crisis to a compressed sale process. The company filed for bankruptcy in late January in Houston, carrying roughly $1.46 billion in debt, dominated by whole business securitization notes, held largely by an ad hoc group controlling approximately 85% of the outstanding balance. The first two months of the case were consumed by a governance showdown. The securitization noteholders moved for appointment of a Chapter 11 trustee the day after the petition, citing more than $200 million in alleged improper insider payments. The situation escalated when the company's controlling chief executive unilaterally directed the post-petition sale of 9 million shares of twin hospitality stock without court approval, prompting an emergency motion to suspend him. The crisis was resolved through mediation, which produced a governance agreement requiring the chief executive to take a leave of absence, terminating family member employees, and reconstituting the board with independent directors. With governance resolved, a dual tranch debtor in possession facility totaling up to $307.6 million was approved, and court-approved bidding procedures now set an April 24th bid deadline, an April 27th auction, and a May 8th sale hearing. If no third-party bid emerges, the securitization noteholders are positioned to credit bid their roughly $990 million in prepetition notes, plus up to $230.7 million in rolled-up claims. Moving along, Axip Energy Services, a Houston-based natural gas contract compression company, has completed one of the most compressed Section 363 sale processes seen recently in the Southern District of Texas. The court entered the sale order on April 6th, approving the transfer of substantially all assets to Stocking Horse Bidder Service Compression for a base purchase price of $161 million, just 43 days after the February 22nd petition date. ACIP entered bankruptcy, carrying roughly $240.5 million in total funded debt, all of which had matured or was about to mature, with a combined cash balance of just $700 across all bank accounts. The company, which operates approximately $240 compression units with about $326,000 total horsepower across Texas, New Mexico, and North Dakota, cited the loss of a major offshore customer that filed its own bankruptcy, a shift towards centralized compression configurations, and delays in electrical infrastructure build-out in the Permian Basin. A pre-petition marketing process that contacted 85 parties for refinancing and 54 for a sale failed to produce any bid exceeding the existing secured debt. Five bids were received by the March 30th deadline, but none qualified as a competing bid for the primary assets, and the auction was canceled. The $161 million purchase price leaves unsecured creditors and likely even the second lien holders facing minimal or no recovery against the $240.5 million in total debt. And finally, Release Technology Group Holdings, operating under the trade name BlockFills, filed Chapter 11 in Delaware on March 15th, bringing a digital asset brokerage restructuring to the bankruptcy courts. The four debtor entities face an estimated $145 million in customer claims and approximately $4.8 million in secured debt owed to Celsius Network. The institutional cryptocurrency brokerage suffered cascading losses across multiple counterparties, including roughly $8.5 million in unrecoverable loans to Babel Finance, a $12 million settlement with Nexo, and losses tied to Bitcoin mining hardware purchased with Series A proceeds just before the 2022 crypto downturn. The company suspended deposits and withdrawals in early February after Bitcoin crashed below $80,000, triggering mounting customer withdrawal requests. Less than four weeks after filing, the debtors filed a joint Chapter 11 plan featuring a dual-track toggle mechanism. The first path is a customer-led nucleotransaction backed by BlockFill's largest customers who would contribute their distributions back to a new entity in exchange for equity. The second path is a Section 363 sale, with a bid deadline of May 8th and an auction on May 13th. The central contested issue is whether customer digital assets constitute property of the bankruptcy estate, a question with direct precedent from the Celsius Network and other crypto bankruptcy cases. A confirmation hearing is targeted for June 22nd.

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That's it for this week's restructuring report. For more case summaries, court updates, and bankruptcy insights, subscribe wherever you get your podcasts. If you're a restructuring professional, let Stretto help you stay informed, stay compliant, and stay ahead. Visit Stredo.com for more info.