by WILMINGTON, Del. —The Buddy Mac Holdings bankruptcy is hurtling toward the finish line with Phonix RBS emerging as the stalking-horse bidder for the former Buddy’s Home Furnishings franchisee. The deal for the 37 former Buddy’s stores remaining is worth $7 million, according to court filings this week, with the promise to also assume a $1 million loan from SouthState Bank.
Buddy Mac got court approval Tuesday to proceed with bidding procedures for the sale of substantially all company assets, according to the order filed in U.S. Bankruptcy Court for the Northern District of Texas. Buddy Mac filed for Chapter 11 bankruptcy protection on Dec. 4, 2025.
The motion outlines an expedited timeline for the auction process, with bids due Feb. 13, and a final sale hearing scheduled for Feb. 19. If they go forward, the proceedings will take place in the Dallas Division bankruptcy court. Even this short timeline could be circumvented by a competing bid and court approval.
“If the Settlement Agreement is not timely heard, and approved, the Debtors will prove incapable of obtaining critically required DIP lending on a final basis, and will lose their Stalking Horse APA,” BMH’s attorneys from Kane Russell Coleman Logan PC warned in their filing. An APA is an asset purchase agreement.
The Phonix purchase agreement isn’t a surprise because the AF Newco subsidiary is BMH’s largest secured creditor, a status acquired when Phonix purchased a $12 million loan to BMH from Wichita, Kansas’ INTRUST bank. Since filing, BMH has been trying to fend off Phonix and its aggressive attempts to force BMH into Chapter 7 liquidation.
As HNN reported, INTRUST sold the BMH loan to Phonix at the loan’s end-of-August maturity date, according to the bankruptcy declaration. Phonix immediately initiated foreclosure proceedings on each of the properties BMH had put up as collateral for the loan, and those foreclosure efforts were cited by BMH as a reason for its Chapter 11.
The gang’s all here
Phonix’s principals are Brent Turner, Michael Piper and perhaps former Franchise Group CEO Brian Kahn. According to BMH’s counsel, Kahn has been managing Phonix on behalf of AF Newco.
Kahn pleaded guilty on Dec. 10 to conspiracy to commit securities fraud relating to hedge fund Prophecy Asset Management, for which Kahn was a sub-adviser. He faces up to five years imprisonment.
Turner was for four years the CEO of Liberty Tax, which is the company that was used to form FRG in a reverse IPO in 2019. Turner was named president and CEO of Liberty Tax in October 2019 and fired in June 2023, according to news accounts. Piper, formerly CFO at Liberty Tax, is AF Newco’s “managing member,” according to court documents. A year ago, AF Newco acquired 31 American Freight stores from FRG out of bankruptcy. In February, Piper and Turner set up Phonix, according to John Kane, BMH’s counsel.
Because of the $12 million loan and another $1.5 million in DIP financing, Phonix is the stalking-horse bidder through a credit bid arrangement. The court-approved procedures include significant protections for Phonix, as well. Should another party ultimately purchase the assets, Phonix will receive an expense reimbursement of $350,000 to cover professional fees and expenses related to developing its bid. Additionally, any competing bidder must exceed Phonix’s offer by at least $450,000, which is the $350,000 reimbursement plus a $100,000 minimum overbid increment. This means a higher bid would have to be valued at about $7.5 million.
‘As-is, where-is’
In addition, prospective bidders must submit a cash deposit equal to 10% of their proposed purchase price, along with executed purchase contracts, proof of financing capability and other documentation demonstrating their ability to complete the transaction. All bids must be submitted on an all-cash, as-is, where-is basis with no contingencies.
Chief Restructuring Officer Mark Shapiro of Glass Ratner Advisory & Capital Group is coordinating the sale process. Interested parties must execute nondisclosure agreements before receiving due diligence materials, and they must submit all required documentation by the Feb. 13 deadline.
If multiple qualified bids are received, an auction will be held at 10 a.m. (CST) Feb. 17. Within six hours of the auction’s conclusion, the debtors must file notice with the court identifying the successful bidder and backup bidder. Any objections to the proposed sale must be filed by 5 p.m. (CST) on Feb. 18, the day before the sale hearing.
Only one week ago, BMH reached an agreement to sell off its nine stores in Missouri to National TV Sales & Rentals of Missouri for $700,000, or an average of $78,000 per store. If the same math were used for the stalking-horse bid for the remaining 37 stores, the bid would be $2.9 million.
The case is jointly administered under Case No. 25-34839-mvl11 in the Northern District of Texas bankruptcy court, Judge Michelle V. Larson presiding.
Buddy’s buyer revealed
The quasi-secret buyer of Buddy’s Home Furnishings as a franchisor has been revealed: Skyline Investments in Los Angeles, a private equity firm with no prior holdings in home furnishings. Founded in 2020, Skyline shares a “substantial percentage” of its portfolio with Volition Capital.
Partners Jeremy May and Kevin Tom completed their inaugural fund for Skyline last June, $125 million, according to the firm. Skyline’s website states that it is interested primarily in small- and midsized business, including “underserved, high-potential” companies with annual revenues of between $5 million and $50 million across health-care, consumer and family-owned businesses, technology, services and domestic manufacturing.
The deal to acquire Buddy’s Home Furnishings from Fusion, the company that emerged from the Franchise Group bankruptcy, is believed to be in the range of $30 million to $35 million.
Skyline was founded in partnership with Standard Communities, one of the largest national affordable housing developers, according to Skyline’s website. The two organizations share “a holistic approach to community development, with Standard’s focus on housing complementing Skyline’s emphasis on business growth and job creation.”
Prophecy trial update
Returning to Kahn, he is one of three defendants in the DOJ’s prosecution of the Prophecy Asset Management fraud case. Another, John Hughes, also has pleaded guilty. The third, Prophecy co-owner Jeffrey Spotts, was scheduled to go to trial this week, but the judge in the case has hit “pause” until May.
Spotts has pleaded not guilty.
According to a report in Bloomberg News, the delay will allow the judge to consider how to handle as many as 20 classified documents that connect to the case, reviewing them under the Classified Information Procedures Act.
Not surprisingly, neither the nature of the documents nor their role in the case were disclosed, nor was the government agency or agencies that classified them in the first place.
What national security interests could possibly be implicated in a fraud case involving a hedge fund and, with respect to Kahn’s involvement, a bankrupt company that had subsidiaries selling vitamins, pet supplies and furniture? Your guess is as good as mine, but it might have something to do with IEC Electronics, a company that won contracts from the Department of Defense, according to public records.
The chairman of IEC in 2020 was Jeremy Nowak, someone with long-standing connections to both Kahn and Bryant Riley, including sharing membership with both on the board of Vintage Capital, the major private equity holder of FRG. Vintage Capital also was the major private equity holder for IEC.
Spotts and his legal team have been pushing for a speedy trial, arguing that the government has had years to put its case together.
The case is US v. Spotts, 25-cr-519, District of New Jersey.
