Another Receivables Scandal: What the Bankim Brahmbhatt Case Signals, and How It Compares to First Brands

Receivables are supposed to be the “safest” asset on a lender’s balance sheet. Two high-profile cases this fall challenged that assumption. Days after we covered First Brands’ bankruptcy and the $2.3 billion gap in factored invoices, a separate story surfaced in telecom: lenders allege that companies tied to Bankim Brahmbhatt fabricated accounts receivable to secure hundreds of millions in loans.

The new case: telecom invoices, spoofed domains, and $500 million at risk

According to reporting by the WSJ, creditors including HPS Investment Partners, BlackRock’s private credit arm, say entities linked to Brahmbhatt (Broadband Telecom, Bridgevoice, and affiliates) pledged fake customer invoices and email trails to raise debt. Investigators retained by lenders allegedly found emails from look-alike domains and invoices that real telecom counterparties say they never issued; lenders now estimate exposures of $500M+. Several borrower entities filed for bankruptcy in August, and Brahmbhatt has reportedly denied the allegations while lenders pursue recovery.

Key alleged tactics described in filings and lender accounts:

• Fabricated or misrepresented A/R schedules and customer contracts

• Spoofed domains that mimicked actual telecom customers

• Rapid communication cutoff once questions were raised

• Bankruptcy filings across multiple related entities as litigation mounted

The First Brands parallel: when “asset-backed” isn’t

If the Brahmbhatt matter sounds familiar, it’s because First Brands just detonated confidence in trade-finance plumbing. In that case, working-capital provider Raistone asked a judge to appoint an independent examiner after asserting that $2.3B “simply vanished” from receivable pools it believed it owned. In court correspondence, First Brands’ representatives indicated they couldn’t confirm receipt of ~$1.9B of factored cash and said no funds remained in accounts that should have held proceeds for factors.

The U.S. Department of Justice has opened an inquiry; the U.S. Trustee also sought a court-appointed examiner. Large institutions, Jefferies/Point Bonita and UBS among them, disclosed material exposure to the receivables.

Same playbook, different sectors

Both cases highlight variants of the same core risk: if lenders can’t independently verify that an invoice is real and unencumbered, “asset-backed” can become narrative-backed.

• Nature of the receivables

  • Telecom case: Lenders allege outright fabrication, invoices, and email trails that counterparties later disavowed; spoofed domains to impersonate real buyers.

  • First Brands: Allegations center on double-pledged or misdirected receivables and missing proceeds, less about forged customers, more about who truly owned the cash flows and where remittances went.

• Counterparty scale

  • Telecom: Concentrated credit with a private-credit giant (HPS/BlackRock) and bank participants (BNP Paribas).

  • First Brands: Broad contagion across trade-finance and private-credit desks (Raistone, Jefferies/Point Bonita, UBS) and a full Chapter 11 with DOJ interest.

• Post-discovery posture

  • Telecom: Multiple company bankruptcies; borrower’s personal bankruptcy; borrower disputes claims; lenders say the principal is overseas.

  • First Brands: Resignations, DIP financing, and a push for a court-appointed examiner to untangle ownership of cash and invoices.

Why this keeps happening

Receivables finance depends on three controls: (1) true-sale and priority (does the factor really own the paper?), (2) segregated remittance accounts (is cash swept to the right place?), and (3) third-party verification (did a real buyer receive real goods/services and agree to pay?). The telecom allegations stress test #3 (authenticity); First Brands exposed failures in #1 and #2 (title and proceeds). When volumes scale and systems are fragmented, “trust me” beats “show me”, until it doesn’t.

Lender checklist (right now)

• Out-of-band confirms: Don’t rely on seller-supplied contacts. Independently verify buyer identity, domain, and contract authority before purchasing pools. (The spoofed-domain detail in the telecom case is a red flag you can automate for.)

• Waterfall visibility: Mandate daily sweep reports from lockboxes you control; reconcile invoice-level cash applications, the crux of the First Brands shortfall.

• Anti-double-pledge tech: Use registry checks and invoice fingerprinting across platforms where possible; require warranties + repurchase triggers for duplicates.

• Examiner readiness: In distressed situations, expect calls for independent examiners; prepare data rooms that clearly evidence ownership and flows.

The takeaway for brokers and fintechs

These aren’t niche stories. They affect the cost of capital for legitimate borrowers. Each blown-up receivables deal pushes credit committees toward higher reserves, tighter advance rates, and more verification, especially in telecom, auto parts, and other high-volume invoice sectors. Expect more lenders to demand real-time confirmability (API-based invoice validation, domain authentication, and payment-rail traceability) before funding.

Receivables will remain a cornerstone of working-capital finance. But the lesson from Brahmbhatt’s alleged scheme and First Brands’ collapse is blunt: if you can’t prove the receivable, and who gets paid when, you don’t actually have collateral.