Claims Against Willkie and Kahn
Against Willkie Farr, plaintiffs allege aiding and abetting fraud, civil conspiracy and breach of fiduciary duty. They are seeking more than $735 million in compensatory and punitive damages, along with disgorgement of all fees tied to the deal.
Kahn and his wife are named separately, accused of fraud, fraudulent inducement and breach of contract.
The firm has not admitted wrongdoing. But the allegations position Willkie not as a distant legal scrivener, the suit suggests, but as a deeply embedded participant in a transaction that later imploded.
Conflict Backdrop: A Prior Red Flag
The civil case lands in the shadow of an earlier judicial rebuke.
Less than a year ago, a Delaware bankruptcy judge barred Franchise Group from retaining Willkie as Chapter 11 counsel because of the firm’s earlier work for Kahn and B. Riley on the same take-private.
Judge Laurie Selber Silverstein ruled that potential claims against Kahn — and even against Willkie — were so “central” to the bankruptcy that conflict waivers and ethical screens could not cure the problem. Franchise Group was forced to switch lawyers midstream.
For in-house counsel watching closely, that disqualification is now Exhibit A: evidence, plaintiffs argue, that Willkie’s proximity to the deal’s power brokers blurred the line between adviser and insider once the transaction began to collapse.
