In a significant development for B. Riley Financial, lenders to Franchise Group, the firm at the center of B. Riley's financial struggles, have granted a temporary reprieve to the company in order to devise a plan to address its $1.5 billion debt. However, despite this positive news, B. Riley shares experienced a sharp decline, plunging 24%.

As per sources cited in a Bloomberg report, a group of first-lien debt holders agreed to waive certain provisions outlined in Franchise Group's credit agreement. This leniency allows Franchise Group until mid-September to present a comprehensive business plan and restructuring proposal. Additionally, second-lien and holding company lenders have agreed to defer cash interest payments on their debt until October 30.

The news of Franchise Group's lender reprieve comes on the heels of Bloomberg's report on Wednesday, stating that Oaktree Capital is engaged in discussions to acquire a majority stake in two businesses. This positive development contributed to a 46% surge in B. Riley shares on Wednesday. However, Thursday's plunge erased almost half of the gains from the previous day, resulting in a 24% decrease.

The decline in B. Riley shares compounds a challenging period for the company, as its stock has fallen by a staggering 63% since the previous Monday. This downward trend was prompted by the suspension of the firm's dividend and reports suggesting that the Securities and Exchange Commission (SEC) is investigating whether B. Riley adequately disclosed risks associated with its assets.

Investors will closely monitor B. Riley's efforts to address its financial woes, particularly as the mid-September deadline approaches for the submission of a comprehensive business plan and restructuring proposal. The lender reprieve offers the company a window of opportunity to navigate through its significant debt burden and regain stability.

However, uncertainties linger for B. Riley as the SEC's investigation adds a layer of potential legal challenges. The company now faces the dual task of managing its debt obligations while cooperating with regulators to address any concerns regarding asset disclosure.

As the situation unfolds, market observers will closely monitor B. Riley's stock performance and the effectiveness of its efforts to improve its financial standing. Investors and stakeholders alike will be hoping for transparency, stability, and a strategic path forward to bring B. Riley Financial back on track.