The recent bankruptcy of First Brands has emerged as one of the most revealing corporate failures of the year – not only because of the size of the company’s liabilities, but because of how deeply they were buried in off-balance-sheet trade-finance structures.
As the private credit industry continues to scale, this case has reignited debate over transparency, accountability, and the limits of financial engineering. One firm viewing this as part of a deeper pattern is Toronto-based Third Eye Capital Corporation, a leading asset-based private credit manager that recently won a rare legal victory in an international asset enforcement case.
“When First Brands filed for bankruptcy last week, few expected that a large portion of its US$10 billion in liabilities would trace back to off-balance-sheet trade-finance arrangements,” Third Eye Capital CEO Arif Bhalwani said in a recent social media post. “Yet again, we see what happens when opacity meets leverage.”
Firms like Raistone, and before them Greensill and Stenn, promised to modernize trade finance through fintech-driven platforms, offering liquidity through automation and financial structuring. But in practice, critics argue these platforms often multiplied hidden obligations, blurred collateral rights, and fragmented accountability, creating leverage that neither investors nor auditors could easily measure.
The result is a financial ecosystem where credit exposure can exist without visibility, and where debtors can operate with leverage levels far beyond what public filings disclose.
The First Brands collapse echoes another case in which Third Eye Capital Corporation was directly involved: the long-running enforcement effort against Por Liu, a Singapore-based shipping executive. After more than five years of litigation, Third Eye obtained a Marshall Islands court ruling piercing the corporate veil of Liu’s company, Parakou Tankers Inc., holding him personally liable for over US $10 million in unpaid debt tied to a collapsed ship-financing transaction.
The ruling was extraordinary – one of the rare instances of veil-piercing in an offshore jurisdiction, especially in the insular world of global shipping finance. The court found that Liu had intentionally drained Parakou’s assets, using the corporate structure as a façade to defraud creditors.
In both cases, the pattern is similar: elaborate structures were weaponized to evade accountability.
Arif Bhalwani: Transparency Is Not Optional
For Bhalwani, these events carry urgent lessons for the private credit and asset-based lending (ABL) sectors.
“For those of us in asset-based lending and private credit, the message is clear: transparency is a prerequisite, not a substitute, for sophistication,” he said. “The lesson isn’t to fear financial innovation, it’s to pair it with discipline.”
Private credit has become one of the fastest-growing corners of global finance, with fund managers deploying record levels of capital into bespoke structures often beyond the reach of traditional bank oversight. But as the First Brands case underscores, not all innovation is value-adding, especially when it obscures the true nature of risk.
The collapse also reinforces the need for more rigorous due diligence, particularly when dealing with fintech intermediaries or non-standard collateral. As more capital flows into private markets, the pressure to balance innovation with transparency is intensifying.
Between the Marshall Islands ruling with Parakou and the financial wreckage of First Brands, one principle is becoming clear: structures designed to evade scrutiny, whether legal or financial, will eventually fail, either in the courtroom or in the market.
With investors continuing to chase yield in a crowded, complex market, the discipline to look under the hood and demand clarity may become the most valuable skill of all.
As Bhalwani put it: “True expertise deserves a premium. Because in credit, what you don’t see is often what hurts you most.”
