Franchise Group Lender Fighting Leads to New Bankruptcy Suit

Bankrupt brand manager Franchise Group Inc.'s first-lien lenders sued the company’s second-lien lenders, arguing the lower-tiered group violated an intercreditor deal by seeking a $158 million priority payout.

Alter Domus (US) LLC, as the administrative agent for the second-lien debtholders, breached the intercreditor agreement by seeking an expense claim last month based on the reduced value of its collateral, according to a suit filed Sunday by Wilmington Trust NA in the US Bankruptcy Court for the District of Delaware.

The suit is the latest development in Franchise Group’s Chapter 11, which has featured a lender-on-lender battle throughout the case. The ...