B. Riley Financial's Nasdaq Delisting Threat: Strategic Response and Long-Term Viability

![Timeline illustrating B. Riley Financial's key events from 2023 to 2025, including the Franchise Group bankruptcy, SEC subpoenas, delayed filings, and strategic moves like the BRS carve-out. The graphic highlights Nasdaq's delisting threat and the company's compliance efforts.]

In the volatile landscape of public markets, B. Riley Financial (NASDAQ: RILY) finds itself at a critical juncture. The firm's recent Nasdaq delisting threat-triggered by repeated failures to file SEC reports-has intensified scrutiny of its financial health and strategic credibility. While the company has taken steps to address compliance issues, its long-term viability remains contingent on navigating regulatory, operational, and market challenges with precision.

The Delisting Threat: A Consequence of Regulatory and Operational Struggles

B. Riley Financial received a Nasdaq Staff Determination Letter on October 1, 2025, citing non-compliance with Listing Rule 5250(c)(1) due to delayed filings for its quarterly reports ending March 31 and June 30, 2025. Despite filing its 2024 Form 10-K on September 19, 2025, and submitting an Updated Plan of Compliance, the firm missed its final cure deadline of September 29, 2025, according to a StockTITAN article. Nasdaq's refusal to extend deadlines underscores the exchange's tightening enforcement of listing standards, a trend observed in Nasdaq's delisting wave.

The delisting risk is compounded by B. Riley's broader financial instability. Over the past three years, the firm has reported cumulative losses exceeding $1 billion, exacerbated by the bankruptcy of its key investment in Franchise Group, Inc. (FRG) and ongoing SEC investigations, per Simply Wall St. These challenges have eroded investor confidence, with the stock price plummeting from a July 2023 peak of $60 to a low of less than $3 in April 2025, despite a modest rebound to $7.90 in recent months, according to a Bloomberg report.

Strategic Response: Compliance Efforts and Structural Restructuring

B. Riley's immediate response has focused on regaining compliance. The firm plans to request a hearing before a Nasdaq Hearings Panel, which would automatically stay delisting for 15 days and allow additional time to file the delayed reports, as noted in the PR Newswire release. This approach mirrors strategies employed by companies like Netflix, which briefly delisted in the early 2000s before relisting after addressing compliance issues, a scenario discussed in the Nasdaq's delisting wave piece. However, success hinges on the panel's decision and the firm's ability to submit the required filings promptly.

Beyond regulatory compliance, B. Riley has pursued structural restructuring to stabilize its operations. A notable move is the strategic BRS carve-out, which will trade independently on the OTC Pink market under the ticker "BRLY" while retaining 89% ownership by the parent company. This separation aims to enhance operational focus, improve transparency, and align with the core strengths of serving middle-market clients. Similar carve-outs, such as PayPal's spin-off from eBay, have historically enabled firms to unlock value and refocus on growth, as noted in a LinkedIn analysis.

Financially, the firm has restructured its debt through issuance of new senior secured notes totaling $87.7 million in 8.00% Senior Secured Second Lien Notes, reducing outstanding debt by $35 million. This effort, coupled with support from Oaktree Capital Management-providing liquidity via warrants-offers a temporary lifeline, per a company filing. However, with $470 million in debt maturing in 2026, B. Riley must demonstrate sustained financial discipline to avoid further distress.

Long-Term Viability: Challenges and Opportunities

The firm's long-term prospects depend on its ability to address systemic weaknesses. Delisting would exacerbate liquidity constraints, as shares would trade on less liquid OTC markets, potentially leading to wider bid-ask spreads and reduced institutional investor participation, as shown in a ScienceDirect study. Historical precedents, such as Digital Brands Group and Lipella Pharmaceuticals, illustrate how delisted firms often struggle to regain market traction without addressing root causes, as explained in a MarketsGoneWild guide.

Yet, B. Riley's strategic pivot to core services-such as advisory and capital markets-could position it for recovery. The firm's CEO, Bryant Riley, has emphasized a return to its historical strengths in serving small and mid-cap companies, a niche where larger banks like JPMorgan and Bank of America may lack agility, as noted in a Seeking Alpha article. If successful, this refocusing could differentiate B. Riley in a competitive landscape.

Conclusion: A Delicate Balance of Risk and Resilience

B. Riley Financial's path forward is fraught with risk but not without potential. The firm's immediate priority must be regaining Nasdaq compliance through the hearing process and timely filings. Simultaneously, it must execute its structural and financial restructuring with rigor to rebuild credibility. While the road to recovery is uncertain, the company's ability to leverage its core competencies and adapt to market realities will determine whether it emerges as a resilient player or succumbs to the pressures of delisting.

For investors, the key takeaway is clear: B. Riley's next 30–60 days will be critical. Success in this period could stabilize its position and restore investor confidence, while failure may cement its decline. In an era of heightened regulatory scrutiny and market volatility, the firm's response will serve as a case study in the delicate balance between strategic reinvention and operational execution.