UPDATE 1: Court Schedules Nov. 17 Hearing on Raistone Examiner Motion

Thu Oct 09, 2025 06:15 PM ET: Judge Christopher Lopez entered an order this afternoon scheduling a hearing on Raistone Capital’s motion to appoint an examiner in the First Brands Group chapter 11 cases on Nov. 17 at 2 p.m. ET. Objections are due Nov. 5.

Judge Lopez declined to set the hearing earlier as requested by Raistone. As detailed below, Raistone sought an emergency hearing on the motion no later than the Oct. 29 combined final DIP and second day hearing.

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Original Story 3:53 p.m. UTC on Oct. 9, 2025

Factoring Creditor Raistone Demands First Brands Group Examiner Conduct ‘Full Accounting’ for ‘Vanished’ $2.3B, Calls Special Committee Investigation Conflicted, ‘Woefully Insufficient’  

Relevant Document:
Examiner Motion

Factoring creditor Raistone Capital is demanding the appointment of an independent examiner in the First Brands Group chapter 11 cases to investigate how as much as $2.3 billion of funds attributable to the debtors’ third-party factoring agreements has “simply vanished.” Raistone asserts the examiner should investigate the company’s prepetition factoring and other off-balance-sheet financing claims against current and former insiders, officers and affiliates. The examiner should also trace and provide a “full accounting” to determine the ownership of the debtors’ receivables before and after the petition date, says Raistone.

Raistone argues that the debtors’ special committee’s investigation into factoring “irregularities” is conflicted and “woefully insufficient” to address the “enormity of this potential defalcation.” Raistone says the special committee is inherently conflicted because of their appointment by the debtors and the committee’s lack of independent counsel and advisors. Raistone asserts that the debtors’ priority is a “reorganization or sale of the existing business” and not “figuring out what happened” to the missing funds, given that the debtors have provided no timeline for the investigation or “what, if any, efforts” will be made to recover the funds.

A “truly independent” investigation is necessary, Raistone argues, given that the debtors’ prepetition management, including founder and CEO Patrick James and CFO Stephen Graham, apparently remain in their roles. Although incumbent management is now supported by the “purportedly” independent directors on the special committee, Raistone asserts that it is “highly questionable” that the committee will “conduct the thorough and robust investigation called for in light of the deeply concerning circumstances.” Raistone notes that management’s counsel, Debevoise & Plimpton, is already on record at the first day hearing “categorically refuting” any allegations of wrongdoing.

Raistone asserts that the debtors collected and failed to turn over approximately $1.9 billion in factored receivables but have provided no detail on the disposition of the funds. Raistone says debtors’ counsel only made a “passing” reference to the failure to turn over the funds at the first day hearing last week where the debtors secured interim approval of $1.1 billion in new-money DIP financing with only $12 million cash on hand.

When Raistone sought a call with the debtors after the first day hearing to discuss “whether FBG actually received $1.9 billion (no matter what happened to it),” the filing states, debtors’ counsel responded, “We don’t know.”

Raistone asserts it is owed “no less” than $172 million. Factoring creditor Katsumi Servicing disclosed at the first day hearing that it is owed approximately $1.75 billion on about 210,000 receivables. Katsumi Global LLC is separately listed as a top-30 creditor holding a contingent unliquidated claim in an undetermined amount.

Raistone purchased receivables from the debtors under a May 2024 receivables purchase agreement annexed to the motion. Raistone emphasizes that its purchases under the agreement are structured as a “true sale” such that the purchased receivables and proceeds are Raistone’s property and are not estate property. Raistone asserts that the debtors, “at best,” have “significant internal control issues” and “at worst, have allowed or caused a misappropriation of billions of dollars of non-estate property.”

Under the agreement, the debtors acted as the servicer and collection agent for the receivables sold to Raistone. Any funds they collected were to be held “in trust,” segregated from the debtor seller and servicer’s other property as Raistone’s “exclusive property.” Raistone exercised its right to terminate the debtors’ role as servicer on Sept. 25, just after the initial bankruptcy filings of the Carnaby SPV debtors, and asserts the receivables purchase agreement terminated on Sept. 29 as a result of the First Brands Group chapter 11 filings the previous day.

Section 1(f) of the agreement includes a provision granting a security interest to Raistone “[i]n the event that, contrary to the mutual intent of the parties, any purchase of Purchased Receivables is not characterized as a sale.”

Raistone argues the appointment of an examiner is mandatory when requested by a party in interest and when unsecured debts exceed $5 million – a threshold the debtors far exceed with at least $800 million in unsecured debt. Raistone cites a 2024 decision by the Third Circuit in the FTX chapter 11 cases that found bankruptcy courts lack discretion to deny appointment of an examiner upon request by any party in interest in cases that exceed the debt thresholds under Bankruptcy Code section 1104. Raistone says appointing an examiner would instill creditor confidence and promote transparency that would ultimately reduce conflict in the cases.

Raistone requests that the motion be heard on an emergency basis at the debtors’ upcoming final DIP and second day hearing scheduled for Oct. 29 at 2 p.m. ET, arguing swift action is needed to prevent multiple creditor groups from taking independent action.