"In a complaint filed in New York state court Tuesday, BRC Group Holdings said Willkie allegedly helped former Franchise Group Inc. CEO Brian Kahn hide federal investigations into earlier fraudulent conduct while assisting with a take-private deal that involved both clients. According to Law.com, BRC Group Holdings also alleged that Willkie and Kahn worked together to hide crucial information and move the deal forward, which caused BRC Group Holdings to lose $735 million and Franchise Group to go bankrupt in 2024."
"At the time of the deal, Kahn was under active investigation by the U.S. Department of Justice for committing fraud against another now-defunct company, Prophecy Asset Management, and had substantial debts related to a settlement agreement, the complaint says. Law.com reports that Kahn pled guilty to conspiring to commit securities fraud against Prophecy Asset Management in federal court in December."
BRC Group Holdings filed a New York state court complaint accusing Willkie Farr & Gallagher of aiding a $735 million fraud linked to a take-private deal involving overlapping clients. The complaint alleges former Franchise Group CEO Brian Kahn concealed active DOJ investigations and sizable settlement-related debts while Willkie prepared transaction documents and failed to disclose material conflicts of interest. The suit claims Willkie assisted Kahn in obtaining consents from the Prophecy settlement trust and that these actions allowed the deal to proceed, resulting in BRC's $735 million loss and Franchise Group's 2024 bankruptcy. Willkie denies wrongdoing and asserts ethical compliance.
Read at ABA Journal
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