First Brands Blindsides Wall Street in ‘Black Box’ Loan Fiasco

In hindsight, the telltale signs of trouble were piling up: the Zoom calls where the owner kept his camera off; the angry pushback from his brother when investors asked for invoices to back up their loans; the frequent late payments to suppliers; and the whispers of large off-the-books financing arrangements.

That so few outside of First Brands had a full view of all the red flags around the auto-parts supplier before it imploded spectacularly late last month, stands as a stark example of the growing risks of money flooding into the opaque world of private financing. How it operated, where ...