First Brands Exposure of $1.75 Billion Hits Japanese Venture
Lawyer for Katsumi Global Told Judge That the Venture Extended Trade Financing for That Amount to Bankrupt Auto Parts Supplier
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A joint venture between Norinchukin Bank and Japanese trading house Mitsui & Co. faces $1.75 billion of exposure to bankrupt auto parts supplier First Brands Group, court documents show.
A lawyer for Katsumi Global told a Texas bankruptcy judge last week that the venture extended trade financing for that amount to First Brands, according to a transcript of the Oct. 1 hearing filed in court late Oct. 8.
The lawyer, Charles Kelley, said Katsumi is the buyer representative for hundreds of thousands of purchased receivables. When First Brands filed Chapter 11 last month, Katsumi had roughly 210,000 outstanding purchased receivables worth approximately $1.75 billion, or about $9,000 per receivable, Kelley said.
RELATED: First Brands Probes Billions of Off-Balance Sheet Financing
According to the transcript, Kelley told Judge Christopher Lopez during the Oct. 1 hearing that Katsumi’s advisers “are working with limited information” but that his client views receivables it purchased from First Brands as property it has acquired. Katsumi is hopeful that the Chapter 11 case will “move quickly so we can receive proceeds,” he said at the hearing.
Norinchukin Bank in Tokyo. (Kiyoshi Ota/Bloomberg)
Texas-based Katsumi focuses on asset-based lending and trade finance, according to its website. It’s a wholly owned subsidiary of JA Mitsui Leasing, a Tokyo-based company that provides leasing and financing services for a range of sectors.
Both JAML and Norinchukin declined to comment on the details of individual transactions. Norinchukin told Bloomberg News that it’s discussing appropriate responses with JAML.
A spokesperson for Mitsui said it didn’t know about the size of the exposure. A representative for Katsumi didn’t immediately reply to a request for comment.
First Brands filed for bankruptcy Sept. 28, listing liabilities between $10 billion and $50 billion in its Chapter 11 petition. Katsumi’s claim is the largest disclosed so far, followed by that of a fund controlled by a unit of Jefferies Financial Group that disclosed about $715 million invested in receivables due by First Brands’ customers.
The transcript of the Oct. 1 hearing was included in papers filed by creditor Raistone, a provider of short-term financing, which has alleged that as much as $2.3 billion tied to First Brands has “vanished.”
Norinchukin, also known as Nochu, is one of Japan’s largest institutional investors and a major buyer of so-called collateralized loan obligations globally. The lender has been undergoing a restructuring of its balance sheet this year after facing losses following a surge in U.S. interest rates.
Written by Irene García Pérez, Jonathan Randles, Taiga Uranaka and Yusuke Maekawa
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