Handler, who said he did not see the First Brands bankruptcy as a “canary in the coal mine,” talked about First Brands and the wider business climate. “I’ll just say, this is us personally, we believe we were defrauded, okay, from a company. I personally talk to a lot of investors, a lot of CEOs, a lot of operating businesses. I think the environment is generally pretty darn good.” Handler added that he thinks “there’s a fight going on right now between the banks and direct lenders who each want to point fingers at each other and say, ‘It’s your fault.’ ‘No, it’s your fault.’ The fact of the matter is, the economy is generally good.” He noted, “It doesn’t feel like we’re on the edge of a default cycle, quite frankly, to me, and I’ve been on the edge of default cycles before.” It also doesn’t look to him like the climate in 2007, “when the world’s about to come to an end.” The canary in the coal mine, he added, is usually the entire financial sector, and he just doesn’t see that.
In their letter, Handler and Jefferies president Brian Friedman strongly denied earning undisclosed fees and emphasized the bank was never aware of fraudulent activity at First Brands, stating: “We learned of the fraud allegations when the rest of the public learned.” Regarding the blow to the company’s financial position, they said they believe the “impact on our equity market value and credit perception … is meaningfully overdone, and we expect this to correct soon as the facts and range of outcomes are better understood.”
Regarding its previous relationship with First Brands, Jefferies said over the past 10 years, it only served as a financial advisor once (for an acquisition), and while it underwrote a $300 million loan in 2023, other financing it arranged in the past decade was on a best-efforts, not underwritten, basis. “We are aware of nine other banks being involved in acquisitions or loan arrangements for First Brands.”
Enron’s flawed accounting was also partially exposed by Fortune itself, with Bethany McLean posing a simple question in March 2001: “Is Enron overpriced?”
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
