Franchise Group, Inc. is past plan effectiveness and operating in post-confirmation, with the reorganized debtors and litigation trustees now working through residual claims reconciliation and plan-injunction management under the confirmed Ninth Amended Joint Chapter 11 Plan.
The debtors—50 legal entities running roughly 2,200 retail locations and employing 11,900 people across The Vitamin Shoppe, Pet Supplies Plus, American Freight, and Buddy's Home Furnishings—filed chapter 11 on November 3, 2024 in the District of Delaware before Judge John T. Dorsey. The first-day declaration of Chief Restructuring Officer David OrlofskyDkt. 15 traced the filing to an overleveraged balance sheet, inflationary pressure, underperforming stores, and rising interest expense, compounded by an August 2023 take-private financed by B. Riley Principal Investments and Irradiant Partners and the November 2023 identification of then-CEO Brian Kahn as an unindicted co-conspirator in SEC and DOJ actions against the president of Prophecy Asset Management LP; an independent Petrillo Klein Boxer investigation cleared other personnel, and Kahn resigned in January 2024. Prepetition secured debt totaled approximately $1.985 billion, structured as a $1.097 billion first lien term loan (Wilmington Trust), a $248.7 million ABL facility (JPMorgan), a $125 million second lien term loan, and a $514.7 million HoldCo term loan (both Alter Domus), all detailed in the Orlofsky declarationDkt. 15.
The cases moved quickly on a combined senior secured priming superpriority DIP and cash-collateral package with a $750 million total commitment—$250 million of new money and a $500 million roll-up of prepetition secured debt—secured over DIP collateral with superpriority administrative-expense status and adequate protection for the prepetition secured parties. Final approval followed a supplemental objection from an Ad Hoc Group of Freedom Lenders.
Restructuring centered on the Ninth Amended Joint Chapter 11 PlanDkt. 1454, built around a Global Settlement among the debtors, the Official Committee of Unsecured Creditors, the Ad Hoc Group of First Lien Lenders, and the Freedom Lender Group, paired with a Plan Equitization Transaction. The plan separated the estate into Non-Liquidating Debtors continuing as going concerns, American Freight Debtors winding down through store-closing sales, and Vitamin Shoppe Debtors subject to a Partial Sale Transaction expected to yield net proceeds of no less than $177.25 million to pay down DIP and ABL debt. Allowed prepetition first lien loan claims received 100% of the reorganized common equity plus 30% of the litigation trust units; a litigation trust funded by a $21 million escrow (less creditors' committee fees) and a $13.25 million TopCo cash allocation was established to pursue permitted litigation claims, alongside a post-emergence management incentive plan. The court confirmed the plan for all debtors other than Freedom VCM Holdings (TopCo) by order signed June 2, 2025, entered a separate TopCo confirmation order on July 1, 2025, and the plan became effective June 6, 2025, as noticed in the post-confirmation mailing recordDkt. 1882.
The reorganized debtors are now in claims-administration mode. On June 12, 2026, the court sustained the Ninth Omnibus (Substantive) Objection to ClaimsDkt. 2046, disallowing, reclassifying, and reducing disputed claims, and granted the joint motion extending the claims objection deadlineDkt. 2047 to December 1, 2026 across general unsecured, administrative, priority, and secured claim categories. The June 16, 2026 omnibus hearing was cancelled as the agenda matters resolvedDkt. 2048, and the court entered an order approving a stipulationDkt. 2051 granting Robert Lee Coleman limited relief from the plan injunction to pursue a pre-existing Florida civil action, with recovery capped at the proceeds of a Chubb insurance policy and the plaintiff barred from estate, litigation trust, or reorganized-debtor recourse.
