First Brands Fraud: Raistone Seeks Emergency Rescue

Raistone, a major lending and trade finance firm, is seeking a rescue or potential sale following the high-profile collapse of its largest client, First Brands Group, an auto parts supplier that filed for bankruptcy in late September 2025. First Brands' demise exposed significant risks and alleged financial irregularities in the private debt market, with as much as $2.3 billion in assets reportedly missing and under investigation.​

Impact on Raistone

• Raistone generated the vast majority of its revenue from its relationship with First Brands—reports suggest as much as 80% or more depended on that single client.​

• The bankruptcy left Raistone with substantial exposure due to extensive involvement in factoring and supply chain finance arrangements with First Brands, rendering it both a major creditor and heavily dependent on the firm’s financial health.​

• In the fallout, Raistone laid off dozens of employees and has begun seeking buyers or additional capital to stabilize its operations.​

Financial Irregularities and Rescue Efforts

• Court filings show First Brands owed Raistone at least $172 million for receivables and a further $684 million in supply chain finance. The total exposure is part of a larger, highly complex web of liabilities, with billions in off-balance-sheet debt.​

• Raistone and other creditors have called for a full investigation after alleging that $2.3 billion in funds “simply vanished” during the bankruptcy process. Independent panels are probing whether receivables were double-counted or if collateral was improperly commingled between lenders.​

• A Texas court approved $500 million in debtor-in-possession financing for First Brands as part of an urgent $1.1 billion rescue package. However, Raistone filed objections, arguing that assets purchased by it should not be included in broader creditor pools.

The events have not only destabilized Raistone but also rippled through the private credit and collateralized loan obligation (CLO) markets, as the opaque financing techniques used by First Brands are now under greater scrutiny from investors and regulators.​

Raistone’s future is now uncertain as it seeks a sale or capital infusion to survive the aftermath of its client’s collapse and the ongoing investigations surrounding missing funds and alleged financial misconduct.​

What Alternative Business Lenders Need to Know?

The operational “autopsy” on Raistone’s role in the First Brands collapse reveals a complex mix of risk misjudgment, business strategy flaws, and opaque financial structuring. Raistone ended up with 80% revenue concentration in First Brands through both deliberate choices and gradual overexposure, which represents a business model failure rather than just a risk management oversight.​

Raistone's Concentration: Strategy or Drift?

• Raistone technically avoided breaching concentration thresholds on paper by splitting indirect exposure across various First Brands entities, but this masked the true risk, as its economic dependence grew dangerously concentrated.​

• This obfuscation appears strategic, designed to comply superficially with guidelines, but the substance shows the firm’s business model was ultimately built around one dominant client—a high-risk approach that is now widely criticized.​

• Evidence suggests both intentionality and neglect: Raistone’s management did not intervene as First Brands came to overshadow their book, indicating either complacency or a conscious bet on the continuing relationship.​

Raistone's Structure: Principal Risk or Intermediary?

• Raistone’s platform operated as a non-bank lender specializing in supply chain finance and invoice factoring, claiming “non-recourse” finance—meaning it took principal risk rather than passing it to investors.​

• They distributed transactions to a network of institutional investors using back-office technology, legal frameworks, and administrative tools, described as “Raistone Platform Solutions” (RPS). Investors essentially participated in the risk pool, but ultimate losses on insolvent debtors were absorbed by Raistone, not passed directly to end-clients.​

• This was not a fund structure with shareholding, nor pure intermediary “flow-through”—Raistone directly originated, underwrote, and warehoused the risk, taking principal risk as the “owner” of receivables, but funding sourced from managed investor pools suggests a hybrid structure.​

Creditor Stack and Recovery Prospects

• Other major creditors include Jefferies via Leucadia Asset Management, Evolution, Katsumi Global, and trade finance groups such as Trade Finance Company.​

• First Brands’ capital stack at bankruptcy showed $5.5 billion in term loans (likely ranking above Raistone), $226.9 million in asset-backed lending (ABL), plus more than $2.3 billion in off-balance-sheet facilities, with Raistone’s claims largely unsecured or contractually subordinated.​

• Recovery prospects for Raistone are poor: with off-balance-sheet receivables missing and DIP lenders being senior, estimates for trade finance creditors show recovery fractions as low as 10–20%.​

Warning Signs: Double-Pledging and Audit Lapses

• Unremitted collections and “double factoring,” where invoices were pledged several times or proceeds never swept into the proper accounts, started well before filing—Raistone flagged issues only during attempted refinancing in mid-2025.​

• Internal and external audits did not catch these irregularities in time, as controls around collection accounts and collateral were weak, allowing manipulation.​

• No public evidence of “red flags” triggering timely intervention by Raistone, indicating serious failures in ongoing monitoring and risk controls.​

Industry Implications: Factoring Market Response

• Institutional investors are radically reevaluating supply chain finance and factoring pricing models given systemic risk of fraud and concentration seen here.​

• Diligence standards for receivable verification, monitoring collateral flows, and validating transaction documentation are being tightened industry-wide, with greater demand for transparency and operational controls.​

Bankruptcy Recovery Timeline

• Chapter 11 fraud-driven bankruptcies of this size (over $2 billion missing assets) can take 2–4 years to resolve. Early signs indicate an extended process due to forensic examination and regulatory scrutiny.​

• Raistone faces a liquidity crunch that may last 1.5–3 years, depending on the pace of examiner reporting and DIP financing disputes.​

Every aspect of this debacle offers hard lessons: concentrated risk, lax controls, and ambiguous business models are unsustainable in trade finance. Lenders and investors must now demand ironclad transparency, robust operational safeguards, and truly diversified books—or risk suffering similar catastrophic losses.​

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