“Dé·jà vu” … here we go again … shades of Enron, Wirecard etc.
We wrote about this story a couple of days ago with the title: “Defaults Rattle the Private Credit Market” which may be signaling the End of the private credit boom
We also followed up with an update: The First Brands Group Collapse May Signal Private Credit Market Bust.
Here is additional information which has surfaced:
Oct 8 (Reuters) – Trade finance company Raistone, a creditor of First Brands, asked a court on Wednesday to appoint an independent examiner, claiming that as much as $2.3 billion “simply vanished” from the bankrupt U.S. auto parts supplier.
“Under these circumstances – with up to $2.3 billion in assets unaccounted for – the appointment of an examiner to conduct an independent investigation is both mandatory and is critical to maximizing recovery for creditors,” Raistone said in the filing to the Texas Southern Bankruptcy Court.
First Brands had earlier appointed a special committee of independent directors to probe its off-balance-sheet financing and whether invoices were factored more than once.
It believed it had an unpaid $2.3 billion hole on its balance sheet related to third-party factoring arrangements when it filed for Chapter 11 proceedings. Factoring is a financing method used by companies to sell outstanding customer invoices to investors in return for cash.
First Brands collected roughly $1.9 billion of factored receivables without remitting it to the proper owners, according to the filing. After the Ohio-based company filed for bankruptcy, its attorney told Raistone in an October 2 email that they didn’t know if the company had received $1.9 billion. Following this, Raistone requested an independent investigator.
Source: Reuters