TGI Fridays trustee sues TriArtisan over financial mismanagement
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TGI Fridays’ two-year-old bankruptcy case takes a new turn.Photo courtesy of TGI Fridays
A trustee representing TGI Fridays’ creditors is blaming key former executives, directors, and investors of the company for the casual-dining brand’s 2024 bankruptcy in a new legal filing in the TGI Fridays bankruptcy case.
In the filing, Stephanie Wickouski, acting as creditor trustee of the TGIF Creditor Trust, accused former controlling shareholder TriArtisan Capital Advisors and its affiliates, particularly founder Rohit Manocha and Anil Yadav, of self-dealing, mismanagement and breaches of fiduciary duty that allegedly led to TGI Fridays’ bankruptcy two years ago.
The complaint alleges that after acquiring TGI Fridays in 2014, TriArtisan and its investment partners repaid roughly $180 million in acquisition-related debt over the next three years through additional borrowing and sales of company assets. In one example, Manocha and Yadav allegedly borrowed $10 million in a personal loan from a bank at a low interest rate, used TGI Fridays assets as collateral, then turned around and loaned $6 million back to TGI Fridays at a much higher interest rate.
Additionally, the lawsuit accuses Yadav — who had significant interest in franchise locations — of getting a sweetheart deal from unpaid royalties. The complaint alleges that TGI Fridays agreed to forgive $6.2 million in past-due royalties and guarantees in exchange for $500,000.
In short, the suit alleges, some people associated with the private-equity firm that purchased TGI Fridays began profiting from the company’s financial distress rather than helping the company to succeed.
TGIF Creditor Trust also accuses the above-named parties of derailing a proposed reverse merger between TGI Fridays and U.K.-based franchisee Hostmore in September 2024. The deal fell through at the last minute, and TGI Fridays declared bankruptcy shortly after.
The plaintiff argues that TGI Fridays had pledged much of its franchise revenue to support a financing arrangement, but mishandled the arrangement and failed to properly account for monies, including royalties. When TGI Fridays was eventually removed as manager, Hostmore almost immediately pulled out of the proposed merger.
The complaint also questions the value of TGI Fridays’ licensing deals with Kraft Heinz and Utz Foods, alleging the company traded valuable future royalty streams for far less than they were worth.
According to Wickouski, the TGI Fridays executive board did nothing to push back on any of this alleged financial mismanagement, conflicts of interest were not scrutinized, and the company’s creditors were not protected from any of these misdealings.
NRN has reached out to TriArtisan and TGI Fridays for comment.
The legal filing comes against a backdrop of a yearslong decline for TGI Fridays, which closed roughly 80% of its locations from 2014 (the year the company was brought under TriArtisan) until 2025 (the year it was sold to former Fridays CEO Ray Blanchette’s company, Sugarloaf Holdings), according to Technomic data. Sales also declined by more than 82% over the course of this challenging decade for the brand.
In its bankruptcy filings two years ago, the company cited the lingering effects of the pandemic as the primary driver of its financial challenges, though this new lawsuit brings other potential issues to light. Blanchette even recently categorized the TriArtisan decade as “a period of really bad private equity ownership” to NRN sister publication Restaurant Business.
In the lawsuit, the plaintiff is asking the Northern District of Texas Bankruptcy Court to hold all 17 parties named in the lawsuit responsible for their alleged breaches of duty to TGI Fridays, recover nearly $1 million in improperly transferred funds sent to Manocha, Yadav, and former executive Weldon Spangler, and award monetary damages to impacted parties.
Contact Joanna at [email protected]
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