Mr. Brightline, No Limits, and Sir, This is a Wendy’s
Below is our initial take on recent bankruptcy-related developments:
Brightline reworks debt in bankruptcy court but its high-speed trains will keep running in Florida | AP News
Brightline companies that have invested more than $5 billion in developing the U.S.’s only privately held passenger railroad are reworking their debt in bankruptcy court, but continuing railroad services between Miami and Orlando. Brightline hopes its creditors will allow the railroad to borrow $490 million more as it works to attract enough riders to pay all of its expenses.
S&K Take: The Floridian high-speed rail system has filed for bankruptcy (interestingly) in the great state of New Jersey with a plan to de-lever some of its balance sheet. The actual rail opco (Brightline Trains Florida LLC) is not a debtor, presumably to avoid the appointment of a trustee under section 1163. The debtors assert that they have a $490 million lifeline to exit the case from existing creditors. The debtors also claim that the bankruptcy will not impact operations. A dissenting lender has already appeared in the case, challenging the DIP and a 2020 transaction.
House Passes Bankruptcy Bill Restoring Higher Debt Limits | Law360
The U.S. House of Representatives has approved the Bankruptcy Threshold Adjustment Act of 2026, moving forward legislation that would bring back and make permanent higher debt limits for certain small businesses and individuals who are seeking a restructuring process. Under the proposal, the debt limit for small-business bankruptcies would increase from ~$3.4 million to $7.5 million, and the individual Chapter 13 debt threshold would rise from ~$2.1 million to $2.75 million.
S&K Take: A long overdue development in Congress, with the House passing a bill that would permanently set the Subchapter V debt limit at $7.5 million. This was the previous cap under several temporary amendments during the pandemic. The Senate still needs to approve the bill but hopefully common sense will prevail.
Major Wendy’s franchisee files for bankruptcy | Fox Business
Meritage Hospitality Group, one of Wendy’s largest franchisees, has filed for Chapter 11 bankruptcy following a dispute with the fast-food chain’s corporate owner. The bankruptcy will affect 314 locations across 15 states and comes one day after Wendy’s franchising unit sought to terminate Meritage’s franchise rights and lease.
S&K Take: Meritage filed in Michigan, and is facing an early critical battle. QIOR (Quality is Our Recipe), the franchisor entity for Wendy’s, asserts that it appropriately terminated the debtors’ franchise agreement which would leave little to restructure. QIOR filed a motion for relief from the stay, although they ultimately stood down so that the debtors could stabilize operations pending a resolution of the dispute.
