Nov 3 (Reuters) - Vitamin Shoppe-owner Franchise Group,

backed by investment bank B. Riley Financial ( RILY ), said on

Sunday it has commenced voluntary Chapter 11 proceedings in the

U.S. Bankruptcy Court for the District of Delaware.

B. Riley, which had participated in the management-led

buyout of Franchise in 2023, has been under investor and media

scrutiny involving its deal and warned in August its exposure to

Franchise could result in a writedown and losses for the second

quarter ended June 30.

Franchise said on Sunday it has agreed with 80% of its

senior debt holders on a debt restructuring plan.

Under the proposal, subject to court approval, Franchise

said the creditor group has committed $250 million in

debtor-in-possession financing and expected the deal to

substantially reduce the company's debt and provide ample

liquidity to maintain operations.

The Delaware-based company added that it has also

decided to wind down discount furniture retailer American

Freight, which it had acquired in 2019 for $450 million.

B. Riley did not immediately respond to a Reuters

request for comment on Franchise Group's Chapter 11 proceedings.