💥New Chapter 11 Bankruptcy - Franchise Group Inc.💥
Owner of retailers like Vitamin Shoppe files with expensive DIP, draws ire of junior lenders.
Toss on your Gumleafs because we’re about to trod in a pile of sh*t, folks.
Look, we all knew the Franchise Group Inc. chapter 11 bankruptcy cases were coming. And, our very own Johnny, who loves like no other to hang in wretched hives of scum and villainy, has been deep into the X cesspool on the name for some time just waiting … waaiiiting … for large equity holder Bryant Riley to get his comeuppance and short sellers — who have been harping on the fragility of B Riley Financial Inc. ($RILY) stock for literally a year — to get their validation. But while the RILY piece is certainly part of this morass, it wasn’t, in the first instance, a driving force behind what ended up being well … this:
“I didn't know coming into this that this was going to be this lengthy of a first-day hearing.” -- Judge Dorsey, of the District of Delaware.Lengthy? How lengthy? How about 7+ hours over two days — one remote, one in-court — “lengthy.”
SEVEN. PLUS. MOTHERF*CKING. (BILLABLE) HOURS. Spread that out against multiple biglaw firms and someone please check to see whether these debtors are already administratively insolvent, 😜!
Before we dive in — and just to give everyone some sense of magnitude of how much Johnny has enjoyed reviewing this case — please allow us to (re)introduce PETITION fave, Thomas Lauria of White & Case LLP who led with this absolute beaut of a quote before he launched into the first lien lenders’ human shields … uh … we mean … the debtors’ professionals:
“I've been tolling in the vineyards of the law for 38 years now, kind of hard to believe. Over that time I've come to be a great admirer of audacity. Doing the unexpected, employing creative novel approaches, being aggressive, finding new ways to solve old problems. And now, as I … read through the DIP papers, at first I thought to myself, wow, these first lien lenders are really being audacious. But audacity to be successful often requires subtlety and nuance. There is none of that here."
When a man who brandishes a business card that reportedly says “WALK IN. FUCK SHIT UP. WALK OUT” is criticizing you for lacking “subtlety and nuance,” you best batten down the hatches because you are about to get … how do we put this … f*************************************************************************************************cked.
Mr. Lauria continued:
“It is an out-in-the-open, ham-handed grab. On the first day of the case, the 1L lenders seek to effectively end the case without providing time to perform any reasonable diligence, without meaningful negotiation between and among the debtors and all material stakeholders, without providing parties with a reasonable opportunity to build and present a proper evidentiary record for the court regarding matters going to be locked in by this interim DIP order.”Or, more pointedly:
But before we get into how massively contested this first day hearing was, we need to back up and lay some foundation. So, let’s dig in ⬇️.