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At Rekord, we analyze real-world financial events to highlight how verifiable trust infrastructure can prevent systemic risk. The recent First Brands bankruptcy is a case in point.

The Collapse That Shook Lenders

When First Brands Group, the auto parts company behind Fram and Raybestos, filed for bankruptcy in late September, it sent shockwaves through institutional lenders. The reason wasn’t just the $10B in liabilities — it was how the company got there.

According to court filings, First Brands allegedly pledged the same receivables across multiple credit facilities. In one case, the same $10,000 invoice was simultaneously listed as collateral at three different lending desks — Facility A, B, and C.

The result? Classic collateral fraud — the financial equivalent of selling the same car to three buyers. When payments stopped on September 15, lenders including Jefferies, BlackRock, and MUFG suddenly realized their “secured” positions weren’t secured at all. Jefferies alone is reportedly exposed to over $715 million in frozen receivables.

The Problem: Trust Without Verification

This case underscores a critical flaw in today’s asset-based lending (ABL) markets: Collateral verification still relies on manual processes, siloed databases, and delayed reporting.

Each lender believes they have unique rights to a set of assets — but in practice, they’re operating on trust and PDFs, not proof and cryptography. Once those records diverge or are manipulated, detection comes only after the money disappears.

Despite billions in digital transformation budgets, ABL infrastructure is still opaque and largely unverifiable in real-time. The First Brands collapse isn’t a one-off; it’s the predictable outcome of a system that assumes honesty but lacks cryptographic truth.

How Rekord Fixes This — By Tokenizing Trust

At Rekord, we see this as exactly the kind of systemic vulnerability our platform is designed to eliminate.

Rekord’s hybrid ledger and compliance engine allow each receivable, loan, or collateral claim to be hashed onto an immutable, verifiable chain.

Here’s how that changes everything:

• Immutable Proof of Ownership
  Each receivable or asset is assigned a unique digital fingerprint (hash) and recorded on-chain. That entry can’t be altered or duplicated without cryptographic consensus.
• Real-Time Visibility for Lenders
  Every lender connected to the Rekord network can verify whether a receivable has already been pledged — in real-time — before funds are released. The moment an asset is used as collateral, it’s flagged as such globally.
• Smart Contract Enforcement
  Rekord’s programmable trust layer can prevent double-pledging automatically. Smart contracts would reject any attempt to reuse a pledged asset until it’s released or repaid.
• Auditability Without Breaching Privacy
  Using zero-knowledge proofs (zk), institutions can verify ownership and risk exposure without disclosing sensitive client data — the perfect balance between compliance and confidentiality.

From Fraud Detection to Fraud Prevention

Had First Brands’ receivables been logged through Rekord’s Frictionless OS, the alleged fraud would’ve been technically impossible.

Every participating lender would’ve had verifiable collateral data, and the system would have enforced single-use rules for pledged assets at the protocol level — before any capital moved.

The financial losses here are staggering — but they also mark a turning point.
The demand for transparent, fraud-proof ABL infrastructure isn’t theoretical anymore. It’s urgent.

The Bigger Picture

The Rekord protocol is built to turn trust into a programmable asset, making fraud, misreporting, and opaque collateral chains relics of the past.

By bridging institutional compliance and DeFi-grade transparency, Rekord provides:

Instant collateral verification

Cross-lender visibility

On-chain audit trails

Risk management automation

In a world where $10 billion can vanish behind spreadsheets, the financial system doesn’t need another promise of transparency — it needs a trust layer that can’t lie.

That’s what Rekord delivers.