First Brands’ Official Creditor Committee Includes Top Foe
Raistone Claims in Court Papers That Up to $2.3 Billion ‘Simply Vanished’
Bloomberg News

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The official committee of unsecured creditors in First Brands Group’s insolvency case includes an affiliate to Raistone, one of the fiercest critics of the bankrupt auto parts supplier, according to an Oct. 9 court filing.
Raistone, which provides short-term financing and relied on First Brands for more than 80% of its revenue, has demanded a court-appointed examiner investigate First Brands, claiming in court papers that as much as $2.3 billion “simply vanished” from the company.
The U.S. Trustee, which acts as a watchdog in corporate bankruptcy cases, named nine unsecured creditors to a court-supervised committee of creditors. The panel also includes First-Citizens Bank & Trust Co., the Pension Benefit Guaranty Corp. and Yusin Brake Corp.
Such committees are common in big bankruptcy cases. The panels are charged with representing unsecured debt holders including suppliers, some bondholders and, when employee retirement funds are at risk, federal pension regulators.
The committees typically hire law firms and financial advisers to help them negotiate with the bankrupt company. Those professionals are paid for by the company — in this case First Brands. Judges consider a committee’s views on reorganization plans and other issues in big, corporate insolvency cases.
After the committee was appointed, U.S. Bankruptcy Judge Christopher Lopez scheduled a hearing for Nov. 17 to consider approving Raistone’s request for an examiner. The timing gives the panel more than a month to hire advisers and decide whether to back Raistone’s proposal.
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Unsecured creditors are often skeptical of examiners because the cost of any independent investigation reduces what is available to pay them. Also, unsecured creditor panels conduct their own investigation, which can overlap with any probe by an examiner.
First Brands’ bankruptcy filing, which listed more than $10 billion of liabilities on its Chapter 11 petition, set off a round of damage limitation by Wall Street firms now attempting to size up their exposure to the company. Among them, a fund controlled by a unit of Jefferies Financial Group Inc. has about $715 million invested in receivables due by First Brands’ customers, while a joint venture between Norinchukin Bank and Japanese trading house Mitsui & Co. faces $1.75 billion of exposure.