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.