Willkie Farr & Gallagher LLP, represented by Davis Polk, has moved to dismiss a $735 million fraud lawsuit filed by former client BRC Group Holdings Inc., formerly known as B. Riley Financial Inc. The firm contends that the lawsuit is an attempt to harass and that the claims have already been waived by the client.
The lawsuit, filed in the Supreme Court of the State of New York, alleges that Willkie aided and abetted fraud, engaged in civil conspiracy to defraud, and breached fiduciary duties in connection with the August 2023 take-private transaction of Franchise Group Inc. BRC Group asserts that Franchise Group’s founder, Brian Kahn, orchestrated a sophisticated fraud to secure over $735 million in financing for the $2.8 billion deal, which was used to pay off substantial personal debts amid criminal and civil investigations into an unrelated hedge fund fraud. Kahn pleaded guilty last month to his role in a $300 million fraud at Prophecy Asset Management. ([bloomberg.com](https://www.bloomberg.com/news/articles/2026-01-20/rebranded-b-riley-sues-kahn-willkie-farr-over-franchise-group?utm_source=openai))
In its defense, Willkie argues that the claims brought by BRC Group are baseless and constitute harassment. The firm maintains that any potential claims were previously waived by the client, suggesting that the lawsuit lacks merit and should be dismissed.
The outcome of this legal battle could have significant implications for the involved parties and the broader legal community, particularly concerning the responsibilities and liabilities of law firms in complex financial transactions.