Net Lease Tenant Credit Watch: Fall 2026

This edition covers January 1 to September 30, 2026 and uses only the companies’ own Form 8-K filings with the SEC. Three consumer-facing chains that lease store or restaurant space filed for chapter 11 in that period: FAT Brands and its Twin Hospitality subsidiary in January, Sleep Number in June, and Leslie’s on the last day of September, a day after closing about 76 stores. Below is what each filing says, how the Bankruptcy Code treats a landlord when a tenant files, and the questions to put to anyone selling you a single-tenant property or a trust that owns one.

The 2026 filings, from the companies’ own reports

FAT Brands Inc. and Twin Hospitality Group Inc. According to their Form 8-K and Twin Hospitality’s matching 8-K, both companies and their subsidiaries filed chapter 11 petitions in the Southern District of Texas on January 26, 2026. A later 8-K filed June 18 reports that the court approved bidding procedures on April 9, including procedures for assuming and assigning unexpired leases, that an auction was held April 27, and that the sales of the businesses closed on June 5 and June 15, 2026.

Sleep Number Corporation. Its June 12 8-K reports a chapter 11 filing in the Southern District of New York, Case No. 26-11399, with a stalking-horse agreement to sell substantially all assets for $415 million in cash. The filing states that the assets sold exclude any leases the buyer chooses to reject. A later 8-K says the court approved the sale on July 21 and it closed on July 31, 2026, with cash proceeds of $529.5 million.

Leslie’s, Inc. Its September 30 8-K reports that the pool supply retailer and its subsidiaries filed chapter 11 petitions in the Southern District of Texas that day to carry out a pre-arranged plan of reorganization. Under Item 2.05 the company says it approved a plan on September 27 and, on September 29, closed approximately 76 U.S. stores “identified as under- or non-performing,” expecting to vacate them within two weeks. The same filing discloses a Nasdaq delisting notice.

Three filings are not a trend, and we draw no conclusion about any sector from them. Each shows the same pattern a landlord should plan for: a sale or a plan that keeps the stores that earn their rent and sheds the rest.

What the Bankruptcy Code does to your lease

A tenant in chapter 11 decides lease by lease whether to keep or drop each location. Three rules in the Code set the terms.

• Rent keeps coming, for now. Under 11 U.S.C. section 365(d)(3), the debtor must timely perform its obligations under a nonresidential real property lease from the filing date until it assumes or rejects the lease.
• The clock is short. Under section 365(d)(4), a nonresidential lease not assumed or rejected within 120 days of the order for relief, or by plan confirmation if sooner, is deemed rejected. The court may add 90 days for cause; any further extension needs the landlord’s written consent.
• A rejected lease leaves a capped claim. Under section 502(b)(6), a landlord’s damages claim for a terminated lease is limited to the rent for the greater of one year or 15% of the remaining term, not exceeding three years, plus unpaid rent due on the filing or surrender date.

Hypothetical: a store lease has 10 years left at $300,000 a year and is rejected. Fifteen percent of the remaining term is 18 months, which is more than one year, so the claim is capped at $450,000 plus any unpaid rent. That is a claim, not a payment; what unsecured creditors actually recover depends on the case. Against $3 million of rent you were expecting, the gap is the real exposure. Run your own lease through the formula with your counsel.

Why this matters more inside a DST

A Delaware statutory trust that holds single-tenant property has fewer tools than a direct owner. In Rev. Rul. 2004-86, the trust that qualified could not renegotiate the lease or “enter into leases with tenants other than Z, except in the case of Z’s bankruptcy or insolvency.” That exception is narrow, so read how the offering documents handle a vacancy beyond it. Our pages on tenant or master tenant bankruptcy in a DST, the springing LLC and master lease risk cover how those provisions work.

Questions to ask before you buy a net-lease asset or a trust interest

1. Who signed the lease? The parent company, an operating subsidiary or a franchisee? A franchisee lease can be unaffected by the brand’s filing, or the reverse.
2. Is this location on any closure list? Leslie’s identified its closed stores as under- or non-performing. Ask for store-level sales or rent coverage if the lease requires reporting.
3. How much term is left? The section 502(b)(6) cap means a long remaining term protects you less than it seems after a rejection.
4. What reserves and re-leasing powers does the trust have? Check the private placement memorandum for the reserve amount and the conversion trigger. Our DST due diligence checklist lists the sections to read.
5. How concentrated is the income? One tenant means one decision decides your distributions. Compare single-tenant and portfolio DSTs and DST versus direct NNN ownership.

None of these questions predicts a filing. They tell you what happens to you if one comes.

What to do now

1. If you own or are buying a property leased to one of the companies above, pull the bankruptcy docket for your lease and calendar the section 365(d)(4) date.
2. For any single-tenant offer, read the tenant’s latest 10-K and 8-Ks yourself before day 45.
3. If you want income that does not rest on one tenant, request a proposal and ask about traditional DSTs with more than one tenant.

Sources

• FAT Brands Inc., Form 8-K (chapter 11 filing, January 2026)
• Twin Hospitality Group Inc., Form 8-K (chapter 11 filing, January 2026)
• FAT Brands Inc., Form 8-K (sale closings, June 18, 2026)
• Sleep Number Corporation, Form 8-K (chapter 11 filing, June 12, 2026)
• Sleep Number Corporation, Form 8-K (sale closing, August 3, 2026)
• Leslie’s, Inc., Form 8-K (chapter 11 filing and store closures, September 30, 2026)
• 11 U.S.C. section 365
• 11 U.S.C. section 502
• Rev. Rul. 2004-86, Internal Revenue Bulletin 2004-33