{"id":188021,"date":"2025-10-09T12:23:14","date_gmt":"2025-10-09T12:23:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/188021\/"},"modified":"2025-10-09T12:23:14","modified_gmt":"2025-10-09T12:23:14","slug":"first-brands-creditor-claims-as-much-as-2-3bn-has-simply-vanished","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/188021\/","title":{"rendered":"First Brands creditor claims as much as $2.3bn has \u2018simply vanished\u2019"},"content":{"rendered":"

Unlock the Editor\u2019s Digest for free<\/p>\n

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/p>\n

One of First Brands\u2019 largest creditors has alleged that as much as $2.3bn has \u201csimply vanished\u201d as part of the bankrupt auto supplier\u2019s failure, calling for an independent examiner to probe its downfall.<\/p>\n

The claim from Raistone, a technology group that helped arrange a significant portion of First Brands\u2019 off-balance sheet financing with investors, highlights the scale of losses that lenders fear they could suffer as part of the collapse.<\/p>\n

First Brands<\/a>\u2019 swift downfall has sent ripples through global credit markets, the source of trillions of dollars of debt that companies rely on to finance their operations. Investors are now closely watching the bankruptcy proceedings.<\/p>\n

Raistone said, with up to $2.3bn of assets \u201cunaccounted for\u201d, the appointment of an outside examiner to lead an investigation was \u201ccritical to maximising recovery for creditors\u201d.<\/p>\n

\u201cThe debtors should not be permitted to appoint the very parties that will investigate their own potential misconduct,\u201d wrote Richard Jacobsen, counsel for Raistone.<\/p>\n

First Brands has appointed two independent directors to lead an investigation into its off-balance sheet financing arrangements as part of its bankruptcy<\/a>. Its existing management team, including chief executive officer and founder Patrick James, is still in place.<\/p>\n

First Brands has also hired the law firm Weil, Gotshal & Manges and investment bank Lazard to shepherd it through the bankruptcy process.<\/p>\n

The company\u2019s advisers told the court overseeing its bankruptcy that they could not account for $1.9bn of assets meant to serve as collateral to First Brands\u2019 creditors.<\/p>\n

\u201cThe debtors have already at a minimum admitted to accounting irregularities in this instance, but an investigation by the debtors into their own potential wrongdoing is woefully insufficient given the magnitude of potential misconduct at issue,\u201d said Jacobsen in his petition for Raistone.<\/p>\n

First Brands declined to comment. <\/p>\n

Erica Weisgerber, counsel for First Brands\u2019 owners and top executives, told the court this month: \u201cWe\u2019ll continue to hear allegations\u2009.\u2009.\u2009.\u2009about the company and its management. And on behalf of our clients, we want to be on the record categorically refuting those allegations.\u201d<\/p>\n

Raistone on Wednesday noted it was owed at least $172mn. The group, which is part-owned by a fund<\/a> operated by UBS O\u2019Connor, has been tied to investors with $631mn of exposure to First Brands\u2019 invoices, bankruptcy filings show.<\/p>\n

Recommended<\/p>\n

\"People<\/a><\/p>\n

Sunny Singh, a lawyer for First Brands, said there were \u201czero dollars\u201d when asked at a hearing this month where roughly $2bn raised by First Brands through \u201cfactoring\u201d \u2014\u00a0a type of off-balance sheet invoice financing \u2014 was held.<\/p>\n

\u201cIt\u2019s not here. We don\u2019t have it,\u201d he said. \u201cThere\u2019s $12mn in the bank account today. That\u2019s it. There\u2019s nothing else.\u201d<\/p>\n

In most US bankruptcies, the judge allows the company and its advisers to direct the case, believing a debtor-driven process maximises recoveries for all stakeholders.<\/p>\n

However, creditors often worry that in contentious cases with the spectre of potential wrongdoing, debtors may not vigorously look into past behaviour.<\/p>\n

Bankruptcy court often becomes the venue to hash out misconduct allegations in big corporate blow-ups.<\/p>\n

The bankruptcy case of FTX, for example, involved an examiner who probed the cryptocurrency exchange\u2019s actions before it collapsed into insolvency.<\/p>\n

Video: How First Brands Group collapsed<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this…\n","protected":false},"author":2,"featured_media":188022,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[49,50,51,47,52,48],"class_list":{"0":"post-188021","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-headlines","8":"tag-headlines","9":"tag-news","10":"tag-top-news","11":"tag-top-stories","12":"tag-topnews","13":"tag-topstories"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/188021","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=188021"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/188021\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/188022"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=188021"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=188021"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=188021"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}