Company: RILYN
Filing Date: 2025-11-18
Form Type: 10-Q
Source: 0001464790-25-000023
Chunk: 241

Company: B. Riley Financial, Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Part I, Item 8
Chunk 241
---
 then CEO (the “FRG take-private transaction”), of $227,296 as of August 21, 2023.On January 22, 2024, Mr. Kahn resigned as CEO and a member of the board of directors of Freedom VCM. In light of Mr. Kahn’s alleged involvement with the alleged misconduct concerning Prophecy Asset Management LP (“Prophecy”). On November 3, 2024, Freedom VCM filed voluntary petitions for relief under Chapter 11 ("Chapter 11 Cases") of Title 11 of the United States Bankruptcy Code ("Bankruptcy Code"), which impacted the collateral for this loan receivable. To the extent the loan balance and accrued interest exceed the underlying collateral value of the loan an unrealized loss will be recorded in the unaudited condensed consolidated statements of operations. On a quarterly basis, the Company will continue to obtain third party appraisals to evaluate the value of the collateral of the loan since the repayment of the loan and accrued interest will be paid primarily from the cash distributions from Freedom VCM or foreclosure on the underlying collateral.The fair value of the VCM loan receivable was $2,334 and $2,057 as of March 31, 2025 and December 31, 2024, respectively. The remaining principal balance was $224,968 as of March 31, 2025 and December 31, 2024, and exceeded the fair value of the loan receivable by $222,634 and $222,911, respectively.On September 29, 2025, the SEC filed a complaint in the U.S. District Court for the District of New Jersey against Prophecy, its CEO and Kahn alleging violations of certain of the antifraud provisions of federal securities laws. On November 10, 2025, news reports and a court filing by the U.S. Attorney’s Office for the District of New Jersey indicated that the U.S. Attorney’s Office has charged Kahn with securities fraud in connection with his activities as a Prophecy sub-adviser. The charging document is not yet public, and no other information is available to the Company at this time but an initial appearance, bond hearing, and plea agreement hearing has been scheduled for December 10, 2025 before the New Jersey District Court.W.S. Badcock Corporation and Freedom VCM Receivables, Inc. Loans ReceivableOn December 20, 2021, the Company entered into a Master Receivables Purchase Agreement (“Badcock Receivables I”) with W