Apollo Global Management's internal April 2024 presentation on First Brands Group reveals the firm identified major red flags before the auto parts maker's bankruptcy. Charles Moore, the Alvarez & Marsal consultant leading First Brands after its September Chapter 11 filing, cited the presentation in a 112-page court document supporting the reorganization plan.

The Apollo slides flagged that First Brands' cash flow never matched claimed margins, its income statement showed implausible 20% operating margins while acquiring sub-5-10% EBITDA businesses, and CEO Patrick James controlled entities with histories of litigation. Apollo also noted it was on the disqualified lender list and discussed shorting the loan.

Moore's filing alleges Katsumi Global — co-owned by Mitsui & Co. and Norinchukin Bank — discovered invoice discrepancies in September 2023 but continued funding. A sample of seven invoices showed massive inflation, including one worth $240.35 funded at $434,997.58. Despite this, Katsumi funded approximately $4.9 billion more, with Moore estimating $3.8 billion (81%) was fraudulent.

Katsumi claims $1.75bn is owed and denies wrongdoing, but faces potential litigation from the bankruptcy estate. Apollo's position originated from its 2011 Gulf Stream acquisition, giving it access to First Brands' financials that ultimately exposed the alleged fraud.