Working capital platform Raistone earned the bulk of its revenue from First Brands Group, which filed for bankruptcy protection this week, GTR understands.
The New York-headquartered company has originated financing for First Group companies for several years, and multiple sources told GTR this week they understood the relationship made up as much as four-fifths of its income.
Raistone informed dozens of employees yesterday they were being laid off due to the situation at First Brands, a US-based car parts supplier that fell into bankruptcy after struggling to secure lender support for refinancing efforts.
According to one of those former employees interviewed by GTR, Raistone chief executive Dave Skirzenski told staff at that meeting that the share of revenue generated from First Brands was 80% of the company’s total income.
Raistone has not responded to several requests for comment. No wrongdoing by the company is alleged.
Raistone was listed in court filings as a creditor of First Brands, with an undetermined claim related to factoring arrangements. A sales manager at the company was also listed as the creditor contact for six funders with exposure related to supply chain finance.
Raistone said in subsequent filings that one of its special purpose financing entities is owed at least US$172mn in connection with receivables it acquired from First Brands companies.
First Brands companies owe at least a further US$684mn under Raistone’s supply chain finance arrangements, it said.
However, with Raistone typically acting as an intermediary, originating financing for buyers or suppliers and distributing the resulting assets to investors, little is known about the extent of its direct exposure.
Court filings show that overall, First Brands Group companies have US$11.6bn in liabilities, including US$2.3bn from factoring arrangements.
The situation is further complicated by an investigation into whether receivables may have been factored multiple times. The investigation is being carried out by an independent committee.
It will also probe whether collateral that was pledged as security to one lender, Evolution Credit Partners, was commingled with collateral securing a separate asset-backed loan facility.
Meanwhile, a Texas court has approved an application by First Brands to access US$500mn in debtor-in-possession financing from a group of lenders, part of a US$1.1bn rescue package.
Raistone had filed an objection against the proposals, arguing that receivables it had purchased were Raistone property and any funds collected should not be commingled with other recoveries.
First Brands did not respond when contacted.
