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BREAKING: Factoring Creditor Raistone Capital Seeks Examiner Appointment in First Brands Bankruptcy Over $2.3B in Missing Funds

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Relevant Document:
Motion

Factoring creditor Raistone Capital and several affiliates have filed an emergency request for the appointment of an independent examiner in the First Brands Group bankruptcy case, citing the disappearance of up to $2.3 billion in funds from factored accounts receivable and arguing an examiner is needed to investigate what the debtors have characterized as “Third-Party Factoring irregularities.”

According to Raistone’s motion, the debtors collected approximately $1.9 billion in factored receivables that were not turned over to the factors who owned them. When pressed about the whereabouts of these funds at the first day hearing, debtors' counsel stated bluntly: "It's not here. We don't have it. Zero dollars. There's $12 million in the bank account today. That's it."

Raistone, which says it purchased accounts receivable from First Brands under a factoring agreement, claims it is owed at least $172 million and terminated its role as servicer for First Brands just before the bankruptcy filing.

Raistone criticizes the debtors’ plan to have a recently-appointed special committee of independent directors investigate the missing funds while using the same legal and financial advisors as the company. "The Debtors should not be permitted to appoint the very parties that will investigate their own potential misconduct," Raistone says.

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.

The emergency motion seeks a hearing at First Brands' upcoming "second day" hearing, currently scheduled for Oct. 29 at 2 p.m. ET, arguing swift action is needed to prevent multiple creditor groups from taking independent action while potentially recoverable assets remain unaccounted for.

 

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