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Happy Sunday, Crew!

Remember the movie Tommy Boy? Chris Farley selling auto parts, trying to save his dad's company? Well, imagine if Tommy Boy grew up, built a $5 billion empire, borrowed $6 billion to do it, and then one day everyone woke up to find $2.3 billion had just... disappeared.

That's basically what happened with First Brands, except nobody's laughing and federal prosecutors are involved.

The Company Nobody Really Knew

First Brands was the middleman your mechanic loved. You know when you need new brake pads for your Honda Civic and the dealer quotes you $400, but your local shop can do it for $150? Those cheaper parts probably came through a company like First Brands. They imported aftermarket auto parts from overseas and sold them to everyone from Walmart to AutoZone to your corner garage. Think windshield wipers, brake pads, filters, all the unglamorous stuff that keeps your car running without the brand-name price tag.

The company was massive. We're talking 26,000 employees across six continents, $5 billion in annual revenue. But here's the weird part: it was 100% owned by one guy, Patrick James, who might as well be a ghost. Nobody knows what he looks like. No background information exists. In an era where CEOs livestream their morning workouts, this guy was running a multi-billion dollar company from the shadows. That should've been the first warning sign.

The Money Machine That Ate Itself

To understand how $2.3 billion vanishes, you need to understand how First Brands turned invoices into instant cash. It's actually pretty clever when it works.

Let's say First Brands sells $1 million worth of brake pads to Walmart. Walmart, being Walmart, says "Cool, we'll pay you in 90 days." But First Brands needs cash now to buy more inventory from China. So they go to an investor and say, "Hey, we've got this invoice from Walmart for a million bucks. We'll sell it to you for $975,000 cash today. You collect the full million from Walmart in three months."

The investor makes $25,000 for basically waiting. First Brands gets immediate cash. Walmart gets its payment terms. Everyone wins. This is called factoring, and it's as common in business as coffee in an office break room.

But here's where First Brands apparently got creative. And by creative, I mean potentially criminal. Court filings are suggesting they might have been selling the same invoices to multiple investors. It's like photocopying a $100 bill and trying to spend it at different stores, hoping nobody compares serial numbers.

The Day The Music Died

September 15, 2025. Mark that date. That's when First Brands stopped forwarding payments to the investors who'd bought their invoices. Two weeks later, they filed for bankruptcy. And that's when everyone started asking uncomfortable questions.

The most uncomfortable moment came in bankruptcy court on October 1st. A creditor called Raistone, which had facilitated a huge chunk of First Brands' financing, asked through their lawyer: "Where's the $2.3 billion in our segregated accounts?"

The response from First Brands' lawyer, Sunny Singh? "Zero dollars. There's $12 million in the bank account today. That is it. There is nothing else."

The next day, when pressed about whether First Brands had actually received $1.9 billion from customers that was supposed to go to creditors, Singh's response was even more stunning: "We don't know."

We. Don't. Know.

These are bankruptcy lawyers. Their whole job is knowing where money went. And they're standing in federal court saying nearly two billion dollars is just... unaccounted for. Federal prosecutors are now all over this thing like ants on a picnic.

The Casualties Are Piling Up

The fallout is spreading through Wall Street like a grease fire in a kitchen. Jefferies, the investment bank that had been First Brands' biggest cheerleader for over a decade, watched its stock crater 18% in a week after revealing that their Point Bonita Capital fund had $715 million wrapped up in First Brands receivables. BlackRock and Morgan Stanley are yanking their money out of the fund as fast as legally possible. The Texas Treasury is doing the same.

UBS is sitting on over $500 million in exposure through their O'Connor hedge fund. Cantor Fitzgerald was about to buy O'Connor, but now they're trying to renegotiate the whole deal because nobody knows how bad the damage really is.

But the biggest potential victim might be across the Pacific. A joint venture between Japan's Norinchukin Bank and Mitsui has somewhere between $1.4 and $1.75 billion tied up in First Brands receivables through their unit Katsumi. Norinchukin, by the way, just lost $12 billion on government bonds earlier this year. These guys cannot catch a break.

The Japanese are insisting their trades were "true sales" that protect them from First Brands going under. But that only works if First Brands didn't sell the same invoices to somebody else. If they did, we're looking at a legal cage match over who actually owns what, and nobody wins those quickly or cheaply.

Why Patrick James Built a House of Cards

The mystery man himself is reportedly considering stepping down now that the heat is on. But the damage is done. See, First Brands had been on an acquisition spree for 15 years, buying up smaller auto parts companies left and right. Fifteen major acquisitions, all fueled by debt. By the end, they were carrying about $6 billion in various forms of debt against a business doing $1.3 billion in EBITDA.

The math worked as long as everything kept growing. But then came 2024 and 2025. Tariffs started hitting their overseas suppliers hard. Integration costs from all those acquisitions ballooned to $400 million more than expected. Suddenly their debt service was $900 million a year while their cash flow was shrinking.

When you're leveraged to the eyeballs like that, there's no margin for error. It's like driving a car at 100 mph with no brakes. Everything's fine until you need to stop.

The Greensill Ghost Returns

If this story sounds familiar, that's because we've seen this movie before. Greensill Capital blew up in 2021 doing something eerily similar. They ran out of real invoices to finance, so they started financing "prospective receivables," which is fancy talk for "invoices that don't exist yet but trust us, they will."

That disaster helped take down Credit Suisse. And here's the kicker: Raistone, the company screaming loudest about the missing $2.3 billion, was founded by one of Greensill's first employees. They got 80% of their revenue from First Brands and have already laid off half their staff. It's like watching someone who survived the Titanic book a ticket on the Hindenburg.

What This Means for Everyone

This isn't just about one company imploding. It's a stress test for the entire private credit and trade finance boom, and it's happening at the worst possible time. When money was cheap and easy, these invoice financing arrangements looked like brilliant financial engineering. Now that rates are higher and credit is tighter, they're starting to look like a hall of mirrors where nobody knows what's real and what's reflection.

The court is being asked to appoint an independent examiner to trace the money, because nobody trusts First Brands to investigate itself. The big question of who owns which invoices will determine who gets paid and who gets nothing. Meanwhile, everyone's watching to see if investor redemptions stay orderly or turn into a stampede for the exits that could spread contagion to other firms.

As for First Brands itself? It'll probably get chopped up and sold for parts (and yes, the irony of an auto parts company being sold for parts is not lost on anyone). But even that might not recover much for creditors when $2.3 billion has apparently evaporated.

NET-NET

When lawyers stand in federal court and say they don't know where $2 billion went, when the CEO is a phantom nobody's ever seen, when the same invoices might have been sold multiple times, you're not looking at a business failure. You're looking at something that rhymes with "fraud" but has a lot more lawyers involved.

Wall Street wanted those juicy returns from trade finance so badly, they forgot to ask basic questions like "Is this real?" and "Where's the money?" Now they're learning that when you chase yields without checking the fundamentals, sometimes the money just vanishes. And unlike a magic show, it doesn't come back when the performance is over.

Patrick James, wherever he is, built a $5 billion company selling discount auto parts and managed to make $2.3 billion disappear. That's either the worst business story of 2025 or the best magic trick ever performed. The federal prosecutors trying to find him probably aren't applauding.