Nicole Zayac

Willkie advised Warburg Pincus and its portfolio company Softeon, a leading provider of warehouse management system software, on the sale of Softeon to IFS, a leading provider of industrial AI software. IFS recently announced that it entered into a definitive agreement to acquire Softeon. The strategic acquisition extends IFS's industrial AI capabilities into the warehouse management systems market, creating an integrated platform that connects manufacturing operations seamlessly with intelligent warehouse execution. The Willkie team was led by partner Dvir Oren with associate Jeffrey Lord and included partners Mark Cognetti, Timothy Sullivan and Daniel Lopez and associate Gillian Robbins.

Jan 6

1 min

Willkie Farr & Gallagher LLP on Tuesday was accused of aiding a $735 million fraud carried out by an investment manager to secure financing for a 2023 take-private transaction involving Franchise Group Inc., which was then used to pay off the manager's personal debts. BRC Group Holdings Inc., formerly known as B. Riley Financial Inc., and several of its subsidiaries filed a complaint in New York state court against Willkie and investment manager Brian Kahn, who recently pled guilty to securities fraud. Kahn's wife, Lauren Kahn, is also named as a defendant in the suit. According to the complaint, in May 2023, Franchise Group, a company led by Kahn, was merged with two other Kahn-controlled companies in a take-private transaction. As part of this deal, BRC committed to investing up to $560 million in the equity of FRG's new holding company, known as Topco, once the merger closed. In deciding to fund the merger, the complaint states that BRC relied on several representations made by FRG and Kahn, including that FRG had disclosed to its auditors and its board's audit committee any fraud involving FRG's management, and that there had been no governmental investigations or subpoenas of FRG since 2019. Kahn also represented to BRC that he was not in default on any obligations and that he had "full power and authority" to exchange FRG shares for equity in Topco, according to the complaint. However, BRC claims in its suit that all of these representations were false, "and Willkie knew it." In reality, according to the complaint, Kahn, at the time of the merger, was the subject of multiple criminal and civil investigations for his role as a sub-advisor in a $350 million fraud perpetrated by Prophecy Asset Management, and that FRG had received subpoenas from the SEC and DOJ relating to the Prophecy scheme. BRC also accuses the defendants of failing to disclose that a limited partnership formed for the benefit of the Prophecy Settlement Trust held 2.5 million shares of Kahn's FRG stock that were restricted from sale or transfer and that, by February 2023, Kahn had defaulted on more than $30 million of debt due to the Prophecy Settlement Trust. "Willkie was aware of all these material misrepresentations and yet allowed them to be made to BRC, a longstanding and current Willkie client," the complaint states. BRC says Willkie's misconduct was "particularly egregious" because while representing BRC as litigation counsel, the firm also knowingly prepared misleading transaction documents for Kahn, failed to disclose material conflicts of interest, and assisted Kahn in obtaining consent from the Prophecy Settlement Trust, among other things. Although not named as defendants, the complaint identifies Willkie partners Tariq Mundiya and Russell Leaf. According to BRC, Mundiya was a "trusted legal advisor" to Kahn and was listed, alongside Leaf, as a leader of the take-private deal. "As Mundiya, Leaf, and Willkie knew, Kahn needed the take-private to dramatically increase the value of his equity stake in FRG so that he could pay off hundreds of millions of dollars in personal liabilities he owed to BRC affiliates and the Prophecy Settlement Trust," the complaint says. "Willkie actively assisted and conspired with Kahn and FRG in defrauding plaintiffs to help Kahn achieve his goal and generate substantial fees for the firm." In a statement to Law360 on Tuesday, a Willkie spokesperson said: "The facts will make clear that our firm acted appropriately and with integrity at all times, consistent with our values and all ethical obligations. We look forward to defeating these meritless claims and remain committed to upholding the highest standards of ethics and professionalism." According to BRC, the truth came to light about three months after the take-private deal closed, when one of Kahn's co-conspirators in the Prophecy fraud pled guilty to securities fraud and conspiracy, and the SEC brought parallel civil securities fraud claims against the individual. At that point, Kahn's role in the fraud became public, according to the complaint. Kahn was forced to resign from Topco's board, and FRG's business plan unraveled due to "Kahn's inability to negotiate and close strategic transactions resulting from his taint as an alleged criminal co-conspirator in securities fraud," the complaint notes. BRC says that ultimately, FRG collapsed and filed for bankruptcy, causing BRC's equity interests in Topco to become "worthless." "All told, Kahn and FRG's frauds, perpetrated with Willkie's assistance, caused plaintiffs approximately $735 million in cash losses, plus additional foreseeable consequential damages," the complaint contends. Kahn pled guilty in December 2025 to one count of securities fraud in connection with his role in the Prophecy fraud. Counsel for BRC did not immediately respond to requests for comment, and Brian and Lauren Kahn could not immediately be reached. BRC is battling a related class action in California federal court from investors who claim the company made material misrepresentations about its buyout of FRG and failed to disclose risks related to its dealings with Kahn. BRC is represented by Paul R. DeFilippo, R. Scott Thompson, Lyndon M. Tretter, Benjamin A. Gianforti and Nicholas A. Servider of Wollmuth Maher & Deutsch LLP. Counsel information for the defendants was not immediately available. The case is BRC Group Holdings Inc. et al. v. Willkie Farr & Gallagher LLP et al., case number unavailable, in the Supreme Court of the State of New York, County of New York.

Jan 20

4 min

A Willkie Farr & Gallagher client accused the firm in a law suit filed in New York state court Tuesday of breaching its fiduciary duty and conspiring to commit a $735 million fraud scheme related to a take-private deal for Franchise Group Inc., a retail holding company whose former CEO Brian Kahn was also a Willkie client who admitted to his role in a related federal securities fraud conspiracy last month. BRC Group Holdings accused Kahn and Willkie of repeatedly omitting crucial information from filings on the Franchise Group take-private deal before it closed mid-2023 and said that those purportedly hidden details were “fatal” to the success of the business following the deal. BRC said in its Manhattan Supreme Court complaint that Kahn and Willkie worked together to mislead it in order to make the take-private deal happen, causing BRC to lose $735 million and making Franchise Group go bankrupt in 2024. Kahn’s wife Lauren Kahn is also named as a defendant, as she was a guarantor on a $200 million loan related to the financing with BRC where she and her husband—also a guarantor—allegedly made similar false statements to those in the deal documents for the Franchise Group take-private transaction. The Kahns could not immediately be reached for comment. According to the complaint, filed by attorneys at New York litigation boutique Wollmuth Maher & Deutsch, Willkie and the Kahns hid important facts from BRC, including that Brian Kahn had committed a “massive fraud” against another now-defunct company, Prophecy Asset Management, that the U.S. Department of Justice was investigating him for that fraud and that Kahn had substantial debts related to a settlement agreement with Prophecy’s investors which precluded him from transferring 2.5 million shares in Franchise Group that were necessary for BRC’s plans after the take-private deal. In an email to Law.com, a representative for Willkie pushed back on the allegations in the complaint. “The facts will make clear that our firm acted appropriately and with integrity at all times, consistent with our values and all ethical obligations,” the representative said. “We look forward to defeating these meritless claims and remain committed to upholding the highest standards of ethics and professionalism.” During the lead up to the take-private deal, the complaint states Willkie was representing both Brian Kahn and BRC. According to the suit, that was a conflict of interest since Kahn was allegedly just using the take-private deal as a way to get money he owed to the Prophecy investor trust for their settlement agreement, while BRC was looking to profit from the success of Franchise Group. Those interests were “diametrically opposed,” the suit says, but Willkie allegedly kept representing both Kahn and BRC so it could double-dip on fees while helping Kahn make false statements to BRC in deal documents. “Each document contained representations, warranties, or covenants that Willkie knew to be false or that created obligations Willkie knew Kahn could not fulfill,” the suit says. “By drafting and negotiating these agreements on Kahn’s behalf while owing fiduciary duties to BRC, Willkie placed its own financial interest in maintaining lucrative client relationships above its ethical obligations.” Once Kahn’s fraud against Prophecy and the related investigations came to light, the suit says the business began to suffer “mainly due to Kahn’s inability to negotiate and close strategic transactions resulting from his taint as an alleged criminal coconspirator in securities fraud.” Kahn would later plead guilty to conspiring to commit securities fraud against Prophecy in New Jersey federal court in December 2025. The complaint lays out claims against Willkie for aiding and abetting fraud, civil conspiracy to defraud and breach of fiduciary duty, along with other claims against Kahn including fraudulent inducement and breach of contract, with the latter claim also being brought against Lauren Kahn. BRC is seeking at least $735 million in damages, as well as punitive damages and costs and attorney's fees. In an email to Law.com, a representative for BRC said that the company will protect the interests of its shareholders and investors, including special purpose vehicles related to the Franchise Group deal, against Willkie and the Kahns for their alleged fraud scheme. “As detailed in the complaint, material facts were concealed from BRC Group Holdings,” the representative said. “We are pursuing all possible legal remedies to ensure the losses are recovered. As this is an active legal matter, we do not intend to comment further at this time.” BRC is itself embroiled in a securities fraud suit regarding Kahn in California federal court, with a proposed class of investors alleging BRC misled them about the $200 million loan it made to Kahn as part of the Franchise Group deal, exposing them to substantial risk without proper disclosure. In December, a California federal judge declined to fully dismiss that case and ordered BRC to answer its investors’ first amended complaint by Feb. 17. A representative for BRC declined to comment on the California case. In the Manhattan Supreme Court case, BRC is represented by Paul R. DeFilippo, R. Scott Thompson, Lyndon M. Tretter, Benjamin A. Gianforti and Nicholas A. Servider of Wollmuth Maher & Deutsch. Counsel information for Willkie and the Kahns was not immediately available.

Jan 20

4 min

A New York federal judge has paused enforcement of nearly $3 billion in defaulted Venezuelan-issued bonds until a winning bidder for the country's most important seizable asset — the parent company of the oil giant Citgo — is chosen in parallel proceedings in Delaware. Ruling in a brief order on Friday, U.S. District Judge Katherine Polk Failla said she "endorses" an agreement between PDV Holding Inc. and the bondholders to pause enforcement of the bonds until U.S. Circuit Judge Leonard P. Stark chooses a winning bidder for the PDV Holding shares. The latter company, a subsidiary of the Venezuelan state-owned Petróleos de Venezuela SA, or PDVSA, is the indirect parent company of Citgo. The bondholders hold a 50.1% interest in Citgo Holding, which is wholly owned by PDV Holding and the direct parent company of Citgo. The move comes after Judge Failla ruled in recent months that the bonds were validly issued and that the bondholders are owed some $2.86 billion. Shares in PDV Holding are being auctioned off to satisfy a $1.2 billion debt owed to defunct Canadian mining company Crystallex International Corp., which was ousted from a lucrative Venezuelan gold mining project by the administration of then-Venezuelan president Hugo Chávez. The auction has attracted other creditors of Venezuela owed billions of dollars more, since Citgo is Venezuela's most significant seizable asset. In her order on Friday, Judge Failla said the stay of execution would remain in force until a further order from her or, at the latest, seven days after Judge Stark chooses the winning bidder. That decision is expected by the end of the month, she wrote. Judge Stark, formerly a district court judge for the District of Delaware, was elevated to the Federal Circuit in 2022, but he continues to oversee the Crystallex case and other related matters. In her September decision affirming the validity of the bonds, Judge Failla rejected PDVSA's argument that the documents governing the bonds were invalidly issued under Venezuelan law because they are contracts of national public interest requiring assent by the country's National Assembly, concluding that category only includes contracts to which Venezuela itself is a party. Contracts made by the "decentralized public administration," of which PDVSA is a part, are not national public interest contracts, she wrote. The judge said views expressed by Venezuela in an amicus brief siding with PDVSA were "not conclusive and do not persuade the court to deviate from its analysis of Venezuelan law." The case is before Judge Failla once again after the Second Circuit overturned her initial 2020 ruling enforcing the bonds. The appellate court's July 2024 ruling was predicated on an opinion from New York's highest court in February 2024 finding that Venezuelan law, not New York law, governs the validity of the bonds. The bondholders are represented in the litigation by a trustee, MUFG Union Bank NA, and collateral agent GLAS Americas LLC. Counsel for the parties couldn't immediately be reached for comment on Monday. MUFG Union Bank and Glas Americas are represented by Jeff Recher, Paul Paterson and Roberto Gonzalez of Paul Weiss Rifkind Wharton & Garrison LLP and Chris Clark, Brian Burns and Andrew Rodgers of Clark Smith Villazor LLP. Petróleos de Venezuela SA and its subsidiary PDVSA Petróleo SA are represented by Kurt W. Hansson, Igor V. Timofeyev, James L. Ferguson and Zachary D. Melvin of Paul Hastings LLP. PDV Holding Inc. is represented by Michael Gottlieb, Kristin Bender, Nicholas Reddick and Alyxandra Vernon of Willkie Farr & Gallagher LLP. The case is Petróleos de Venezuela SA et al. v. MUFG Union Bank NA et al., case number 1:19-cv-10023, in the U.S. District Court for the Southern District of New York.

Nov 17

3 min

A New York federal judge has paused enforcement of nearly $3 billion in defaulted Venezuelan-issued bonds until a winning bidder for the country's most important seizable asset — the parent company of the oil giant Citgo — is chosen in parallel proceedings in Delaware. Ruling in a brief order on Friday, U.S. District Judge Katherine Polk Failla said she "endorses" an agreement between PDV Holding Inc. and the bondholders to pause enforcement of the bonds until U.S. Circuit Judge Leonard P. Stark chooses a winning bidder for the PDV Holding shares. The latter company, a subsidiary of the Venezuelan state-owned Petróleos de Venezuela SA, or PDVSA, is the indirect parent company of Citgo. The bondholders hold a 50.1% interest in Citgo Holding, which is wholly owned by PDV Holding and the direct parent company of Citgo. The move comes after Judge Failla ruled in recent months that the bonds were validly issued and that the bondholders are owed some $2.86 billion. Shares in PDV Holding are being auctioned off to satisfy a $1.2 billion debt owed to defunct Canadian mining company Crystallex International Corp., which was ousted from a lucrative Venezuelan gold mining project by the administration of then-Venezuelan president Hugo Chávez. The auction has attracted other creditors of Venezuela owed billions of dollars more, since Citgo is Venezuela's most significant seizable asset. In her order on Friday, Judge Failla said the stay of execution would remain in force until a further order from her or, at the latest, seven days after Judge Stark chooses the winning bidder. That decision is expected by the end of the month, she wrote. Judge Stark, formerly a district court judge for the District of Delaware, was elevated to the Federal Circuit in 2022, but he continues to oversee the Crystallex case and other related matters. In her September decision affirming the validity of the bonds, Judge Failla rejected PDVSA's argument that the documents governing the bonds were invalidly issued under Venezuelan law because they are contracts of national public interest requiring assent by the country's National Assembly, concluding that category only includes contracts to which Venezuela itself is a party. Contracts made by the "decentralized public administration," of which PDVSA is a part, are not national public interest contracts, she wrote. The judge said views expressed by Venezuela in an amicus brief siding with PDVSA were "not conclusive and do not persuade the court to deviate from its analysis of Venezuelan law." The case is before Judge Failla once again after the Second Circuit overturned her initial 2020 ruling enforcing the bonds. The appellate court's July 2024 ruling was predicated on an opinion from New York's highest court in February 2024 finding that Venezuelan law, not New York law, governs the validity of the bonds. The bondholders are represented in the litigation by a trustee, MUFG Union Bank NA, and collateral agent GLAS Americas LLC. Counsel for the parties couldn't immediately be reached for comment on Monday. MUFG Union Bank and Glas Americas are represented by Jeff Recher, Paul Paterson and Roberto Gonzalez of Paul Weiss Rifkind Wharton & Garrison LLP and Chris Clark, Brian Burns and Andrew Rodgers of Clark Smith Villazor LLP. Petróleos de Venezuela SA and its subsidiary PDVSA Petróleo SA are represented by Kurt W. Hansson, Igor V. Timofeyev, James L. Ferguson and Zachary D. Melvin of Paul Hastings LLP. PDV Holding Inc. is represented by Michael Gottlieb, Kristin Bender, Nicholas Reddick and Alyxandra Vernon of Willkie Farr & Gallagher LLP. The case is Petróleos de Venezuela SA et al. v. MUFG Union Bank NA et al., case number 1:19-cv-10023, in the U.S. District Court for the Southern District of New York.

Nov 17

3 min