BRC Group Holdings (formerly B. Riley Financial): Kahn, Franchise Group, subpoenas and asset sales

analysisIn August 2023 B. Riley's subsidiaries took a 31% voting interest in the holding company that took Franchise Group private, and B. Riley held security over Kahn's equity in it for a loan to a Kahn affiliate. After Franchise Group's November 2024 bankruptcy B. Riley ascribed no value to the investment and impaired nearly all of the Vintage loan; Kahn pleaded guilty in the separate Prophecy case in December 2025. The SEC's 2024 document subpoenas to the company and Bryant Riley, and its June 2026 testimony subpoenas to employees, are requests with no recorded finding. A federal securities class action is proceeding against Riley and the company after a pleading-stage ruling, a Delaware derivative suit was dismissed because a pre-suit demand was not excused and is on appeal, and the FRG Litigation Trust sued in August 2026. BRC sold businesses and its total debt fell to $1.30 billion by March 2026. Each account keeps the company's response and the status of the proceeding beside it. ^{1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31}

analysisBRC Group Holdings, Inc. is a Delaware corporation (Delaware file number 4676810) registered in the SEC's EDGAR system under Central Index Key 0001464790, with employer identification number 270223495, industry code 6282 (Investment Advice) and a December 31 fiscal year-end; it files as an accelerated filer and smaller reporting company. EDGAR gives its business address as 11100 Santa Monica Blvd, Suite 800, Los Angeles, and lists seven Nasdaq-traded securities: RILY, RILYG, RILYL, RILYN, RILYP, RILYT and RILYZ. A commercial mirror of the Delaware register still shows the company under its former name, with Corporation Service Company in Wilmington as registered agent. ^{1 2}

analysisAccording to its 2025 annual report, the business was founded in 1997 by its Co-Chief Executive Officers Bryant Riley and Tom Kelleher, was incorporated in Delaware in 2009 and became publicly listed through its combination with Great American Group, Inc. in 2014. EDGAR records the earlier names Great American Group, Inc. (June 1, 2009 to October 21, 2014) and B. Riley Financial, Inc. (from October 8, 2014). A Delaware certificate of amendment, filed on December 22, 2025 and signed by Kelleher as authorized officer, changed the name from B. Riley Financial, Inc. to BRC Group Holdings, Inc. with effect from January 1, 2026; EDGAR's own end date for the old name, December 15, 2025, and an extra former-name entry under the current name do not match the certificate, whose date is used here. ^{3 1 4 5}

analysisThe annual report states that 35,150,932 common shares were outstanding on March 27, 2026 and names BDO USA, P.C. of Los Angeles as auditor. ³

analysisB. Riley grew through acquisitions. On September 14, 2020 it announced new "B. Riley" brand names for businesses acquired since 2015: B. Riley Securities, led by Andy Moore, was formerly B. Riley FBR, the product of merging B. Riley & Co. with FBR & Co.; B. Riley Wealth Management was formerly Wunderlich Securities; the GlassRatner and Great American Group advisory and valuation units became B. Riley Advisory Services; Great American Group became B. Riley Retail Solutions; and B. Riley Principal Investments was led by Kenny Young. In February 2021 a cash tender offer for National Holdings Corporation drew about 39% of its shares for about $17.4 million, with a merger to follow that would make National a wholly owned subsidiary. ^{1 2}

analysisThe subsidiary list filed with the 2025 annual report spans principal-investment and finance companies such as B. Riley Principal Investments, B. Riley Commercial Capital, B. Riley Receivables, BR Financial Holdings and BRPI Acquisition Co; the broker-dealer and wealth businesses (B. Riley Securities and its holding company, B. Riley Wealth Management and its affiliates, National Securities Corporation); telecommunications companies including Lingo, magicJack and United Online; the Targus companies; Nogin; and partly owned interests such as bebe stores, inc., Great American Global Partners and One Outdoor Holdings. In EDGAR, magicJack VocalTec Ltd. is recorded as an Israeli company and bebe stores, inc. as a California corporation, and B. Riley Principal Capital, LLC gives the same Los Angeles address as BRC. ^{3 4 5 6}

analysisTwo of the regulated businesses have their own ownership structure. B. Riley Securities Holdings, the holding company of the broker-dealer operations, issued 0.6% of its equity to outside investors in a shell merger on March 10, 2025; assuming full vesting of its restricted stock, BRC owned 89.4% of it then and 92.9% at June 30, 2026. B. Riley Wealth Management, Inc. is wholly owned through B. Riley Wealth Management Holdings, and its 2024 financial statements treat Freedom VCM Holdings, the Franchise Group parent, as a related party because Bryant Riley held a seat on its board. ^{7 8}

analysisBrian Kahn had been chief executive of Franchise Group (FRG) since 2019 and was investment manager of Vintage Capital Management. In March 2023 B. Riley told FRG that it would fund receivables of FRG's Badcock business one final time, for the first quarter, and on March 19 it submitted a non-binding proposal to take FRG private at $30.00 a share in cash. The merger closed on August 21, 2023: B. Riley's subsidiaries held a $281.1 million equity interest in the new parent, Freedom VCM Holdings, a 31% voting interest with board representation, and B. Riley held a first-priority security interest in a 25% equity interest of Kahn in Freedom VCM securing its loan to a Kahn affiliate. ^{1 2 3}

analysisFRG, its operating businesses and Freedom VCM filed for Chapter 11 on November 3, 2024. B. Riley ascribed no value to the Freedom VCM investment at the end of 2024 and recorded impairments of $221.0 million on it and $222.9 million on the Vintage loan. The plan confirmed on June 1, 2025 cancelled all equity interests in the FRG debtors, leaving Freedom VCM, as FRG's equity holder, with nothing; in February 2026 B. Riley collected $1.855 million from the sale of the last collateral for the Vintage loan and expects nothing more. In the separate Prophecy case, B. Riley's filings report that Kahn pleaded guilty on December 10, 2025 to one count of conspiracy to commit securities fraud and, in mid-2026, that he was awaiting sentencing; the plea agreement and any judgment are not among the records reviewed. ^{1 2}

analysisOn July 3, 2024 the SEC sent document subpoenas to the company and to Bryant Riley, primarily about the company's business dealings with Kahn, certain transactions in an unrelated public company's securities, and the communications and related compliance policies of certain regulated subsidiaries. On November 22, 2024 further subpoenas to both sought documents about Franchise Group, including Freedom VCM Holdings, and about Riley's personal loan and his pledge of company shares as collateral for it. In June 2026, in the same continuing inquiry, the SEC subpoenaed certain current and former employees for testimony. Subpoenas are requests: the company states that receiving them does not indicate that the SEC or its staff has determined that any violation of law occurred, and that it and Riley are responding and fully cooperating. No SEC finding, charge or closure concerning the company or Riley appears in the records. ^{1 2}

analysisInvestors sued over the same dealings. In the federal securities class action In re B. Riley Financial, Inc. Securities Litigation (No. 2:24-cv-00662), the court ruled on December 12, 2025 that the fraud claim under Section 10(b) could proceed against Bryant Riley and, through him, the company, but not against Phillip Ahn and Thomas Kelleher. Such a ruling tests only whether the allegations, taken as true, state a claim; it is not a finding that any statement was false or that anyone is liable. The defendants answered on February 17, 2026, and the case moved into discovery and class certification. The Delaware Court of Chancery dismissed a derivative suit against the directors (C.A. No. 2025-0164-LWW) in a decision of March 30, 2026, because the plaintiff had not pleaded that a majority of the board was interested or lacked independence, so a pre-suit demand was not excused; it did not rule on whether the alleged breaches occurred. The opinion's cover page prints March 30, 2025, but the matter was submitted on December 22, 2025, and the company's filings and the court's listing give 2026. Riley said the outcome reflected the integrity of the board and its governance processes, and on April 29, 2026 the plaintiff appealed. ^{3 4 1 5 6 7}

analysisOn August 18, 2026 the FRG Litigation Trust sued Kahn, BRC, B. Riley Securities, GlassRatner, Riley and others in the Delaware Court of Chancery over the take-private, seeking more than $700 million; these are unadjudicated allegations, and no answer by BRC, B. Riley Securities, GlassRatner or Riley appears in the records. Twelve days before the filing BRC had stated that if Kahn-related claims were made it believed it had valid defenses and that they would be without merit, and it says its Audit Committee review and an independent investigation found no involvement with, or knowledge of, Kahn's alleged misconduct by the company or its executives. BRC itself sued Willkie Farr & Gallagher and Brian and Lauren Kahn in New York in January 2026, seeking more than $735 million; no ruling on those claims and no response by the defendants appear in the records. ^{8 1 2}

analysisBRC sold businesses and brand interests: the Brands Transaction of October 2024 brought an upfront payment of about $189.3 million, the November 2024 sale of all class A preferred units and 52.6% of the class A common units of Great American Holdings about $167.1 million, and the June 2025 sale of GlassRatner and B. Riley Farber about $117.8 million. Total debt fell from $1.8 billion at the end of 2024 to $1.4 billion a year later and, according to the company's May 7, 2026 results release, to $1.30 billion by March 31, 2026; the release's Net Debt and Adjusted EBITDA figures are measures the company defines itself, not audited balance-sheet captions. BRC stockholders' equity moved from a deficit of $171.5 million at December 31, 2025 to $142.2 million at June 30, 2026; the parent-company-only statement gives a 2025 deficit $1.0 million smaller, a difference the records do not explain. ^{1 2 3 4}

analysisBRC filed its 2024 annual report late, on September 19, 2025, and its first three 2025 quarterly reports late; Nasdaq's staff sent five Staff Determination Letters over these filings, which did not lead to suspension or delisting, and on January 27, 2026 Nasdaq confirmed that BRC had regained compliance. Its preferred dividends went unpaid for a sixth quarterly period on April 30, 2026, counting from the suspension announced on January 21, 2025, which triggered a Preferred Dividend Default entitling the preferred holders to elect two additional directors. ^{1 4}

analysisBabcock & Wilcox Enterprises (B&W) lists BRC in its 2026 proxy statement as its largest shareholder, with 20.4% held through B. Riley Securities and BRF Investments. On February 11, 2026 Bryant Riley, jointly with his spouse, and a family trust sold 1,155,382 B&W shares for $10.4 million; the joint Form 4 shows the subsidiaries' holdings unchanged. Separately, B&W, which had entered into a limited notice to proceed with Applied Digital in November 2025, signed a definitive $2.4 billion agreement effective February 26, 2026 with Base Electron, "an IPP backed by Applied Digital", for four natural-gas power plants. ^{1 2 3 4 5}

analysisIn 2026 BRC also valued its carried interest in SpaceX investment vehicles at about $84.2 million gross, its own unaudited estimate at one day's share price, and agreed on September 28, 2026 to acquire Sangoma Technologies. ^{6 7 8}