Short seller Jim Chanus predicts more first brands on private credit

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Jim Chanus, one of the most well -known sellers in Wall Street, looked at a alert on a private debt mutation, as the Venangal Times times told the chaotic bankruptcy of the first brand group may lead to a wave of companies.

Some of the biggest names in Wall Street face millions of dollars from losses from Bankruptcy Among the first brands, a very debtor maker of ignition candles and windshield spaces based in Ohio.

First Brands now unveiled approximately $ 12 billion in financing of panels and balances that were built in the years before banking, which also precedes two known special lenders such as a Rental specialist in Utah.

“I think we will see more of these things, such as the first brands and others, when the course is ultimately reflected,” Chanus told the Financial Times.

Chanus, 67, has strengthened that the ENRON’s skilled power dealer, who was like the first brands, was widely used to finance the leaf outside the budget, which preached the collapse of $ 70 billion at the beginning of the 2001 stock market collapse.

He announced in 2023 that he was closing him Main hedge boxes After more than three decades, while continuing to give a customized advice on basic short ideas as well as some total ideas.

In 2020 Lunch with FT interviewChanus said the financial markets were in the “Golden Age of fraud”. He said on Thursday that this phenomenon “has done nothing but high” since he was noticed.

The first brands were not accused of fraud. However, achieving bankruptcy in financing Byzantine papers outside the balance is to study whether the company has pledged The same bills several times. This investigation also discovered that debt guarantees may be “hanging”.

He I mentioned earlier The founder and owner of the group, prominent businessman Patrick James, had been sued by two lenders claiming that fraudulent behavior had exacerbated their losses.

James strongly denied the allegations of fraud in both cases, who were rejected after reaching the settlements.

The first brands and James did not respond to the comment request.

Chanus has been a 2 trillion close credit device that nourishes the Wall Street leaks to fill real estate mortgages that preceded the 2008 financial crisis, due to “the layers of people between the source of money and the use of money.”

First owned private ownership has avoided the most public bond market in favor of money borrowing through the so -called subsidized loans. It also raised billions of dollars through more mysterious financing supported by its bills and stock, which were often provided through private credit boxes.

“With the emergence of private credit … the institutions (they) put the money in this magic machine that gives you fair rates of fairness to the debt,” he said, adding that these high returns for investments that seem safe “must be the first red flag.”

FT previously reported that some private credit fund managers have estimated returns more than 50 percent on the distinguished inventory debts that are supposed to be guaranteed.

Even many of the most advanced credit specialists in Wall Street were not aware of the presence of private target entities for auto parts in the United States (Spes) that support stock financing.

The traders of Goldman Sachs told the customers hours before these financing vehicles It was submitted to bankruptcy Last week, they just discovered indicators on a high -cost borrowing from these entities that were “difficult to reconcile”.

“We rarely see how the sausage is made,” said Chanus.

First Brands’s bankruptcy that James took control of both auto parts group and some Spes from the balance sheet across the same series of limited liability companies. Chanus described this joint ownership as a “huge red flag”.

His short thesis was fueled by Enron partially by realizing that the group’s executives were running Spes, which participated in complex transactions outside the scope of its public budget for companies.

Unlike Enron, the financial statements of the first brands were not available to the public. While hundreds of directors of the so -called guaranteed loan obligations were able to reach the financial disclosure, they had to agree to the inconsistency agreements to receive documents.

Chanus said: “Chesh is part of the operation.” “This is an advantage, not a mistake.”