Tuesday, November 5, 2024

B. Riley-backed Franchise Group commences bankruptcy proceedings

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(Reuters) – Vitamin Shoppe-owner Franchise Group, backed by investment bank B. Riley Financial, said on Sunday it has commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware.

B. Riley, which had participated in the management-led buyout of Franchise in 2023, has been under investor and media scrutiny involving its deal and warned in August its exposure to Franchise could result in a writedown and losses for the second quarter ended June 30.

Franchise said on Sunday it has agreed with 80% of its senior debt holders on a debt restructuring plan.

Under the proposal, subject to court approval, Franchise said the creditor group has committed $250 million in debtor-in-possession financing and expected the deal to substantially reduce the company’s debt and provide ample liquidity to maintain operations.

The Delaware-based company added that it has also decided to wind down discount furniture retailer American Freight, which it had acquired in 2019 for $450 million.

B. Riley did not immediately respond to a Reuters request for comment on Franchise Group’s Chapter 11 proceedings.

(Reporting by Rishabh Jaiswal in Bengaluru; Editing by Chris Reese and Diane Craft)

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