Article
Court Approves UST Examiner Appointment in First Brands Cases, Denies Onset Financial’s Motion to Intervene in Debtors’ Fraudulent Transfer Suit Against Patrick James
At a hearing this morning, Judge Christopher Lopez approved the U.S. Trustee’s application to appoint Martin De Luca of Boies Schiller as the chapter 11 examiner in the First Brand chapter 11 cases. Judge Lopez also issued a bench ruling denying SPV inventory lender Onset Financial’s motion to intervene in the debtors’ fraudulent transfer suit against founder Patrick James, sustaining the debtors’ and James’ objections. The judge originally heard oral argument on the intervention matter on Jan. 7.
The UST and factoring creditor Raistone filed motions in October 2025 seeking an independent examiner in light of the alleged substantial fraud uncovered in the cases, after which on Nov. 19, 2025, Judge Lopez directed the UST to appoint an examiner. De Luca’s appointment was unopposed today.
As to Onset’s intervention motion, Judge Lopez found that Onset’s interests are adequately represented by the debtors in the suit against James. Although Onset’s interests may diverge regarding the allocation of any recovered funds, the judge observed that ultimate entitlements to recoveries from the defendants will be resolved outside the adversary proceeding. Judge Lopez noted that Onset “wants to row in the same direction” to recover funds from the defendants and thus did not demonstrate an adversity of interest justifying intervention.
The judge also faulted Onset for failing to give other parties notice of its grounds for intervention as required by Federal Rule of Civil Procedure 24(c), noting that the lender’s intervention request could be “easily dismissed” on this basis.
Judge Lopez concluded that Onset has every right to file its own lawsuit against the debtors and third parties to assert its interests but should not seek its “own declaratory judgment action” within the debtors’ adversary proceeding against James.
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