<ul><li>BlackRock’s HPS Investment Partners has written off roughly $150 million after discovering allegedly falsified collateral behind loans to telecom entrepreneur Bankim Brahmbhatt.</li>
	<li>The financing, arranged with BNP Paribas, was backed by what turned out to be fabricated accounts receivable and forged customer emails, lawsuits show.</li>
	<li>Brahmbhatt’s companies - Broadband Telecom, Bridgevoice, and Carriox Capital - have filed for bankruptcy; lenders say total exposure exceeds $500 million.</li>
	<li>BNP Paribas took a €190 million ($220 million) provision for a “specific credit situation,” without naming the borrower.</li>
</ul>The private-credit arm of BlackRock Inc. and other lenders are racing to recover hundreds of millions of dollars after falling victim to what they’ve described as a “breathtaking” fraud - the latest sign of weakness in an opaque corner of the U.S. debt markets.

<a data-image-external-href="" data-image-href="/s3/files/inline-images/image%282%29_2.jpg?itok=7bkVeALU" data-link-option="0" href="/s3/files/inline-images/image%282%29_2.jpg?itok=7bkVeALU"><picture><img data-entity-type="file" data-entity-uuid="b13402f8-d5c4-4ac5-b570-1bea123b9633" data-responsive-image-style="inline_images" height="281" width="500" class="inline-images image-style-inline-images" src="https://zh-dev-046fffa0-2095-430f-bd04-a687fe941952.storage.googleapis.com/s3fs-public/styles/inline_image_mobile/public/inline-images/image%282%29_2.jpg?itok=7bkVeALU" alt="" typeof="foaf:Image" /></picture></a>

The lenders, led by HPS Investment Partners, which BlackRock acquired earlier this year, accused businessman Bankim Brahmbhatt of fabricating invoices and accounts receivable that he used as collateral for loans totaling more than $500 million to his telecom-services firms, Broadband Telecom and Bridgevoice.  The alleged scheme is now the subject of an August lawsuit and multiple bankruptcies.

Brahmbhatt, through his attorney, has denied the fraud allegations to the <a href="https://www.wsj.com/finance/blackrock-stung-by-loans-to-businesses-accused-of-breathtaking-fraud-6de5c3a7">Wall Street Journal</a>. 

<h2>A Familiar Pattern of Trouble</h2>

The dispute centers on asset-based financing, a type of private credit deal where lenders extend funds secured by cash flows or receivables from the borrower’s business. The market has ballooned alongside the broader private-credit boom, now topping $1.7 trillion globally, as nonbank lenders rush to fill a void left by traditional banks.

But a series of collapses, which include the headline-grabbing bankruptcies of First Brands and Tricolor Auto Group, both accused of pledging questionable assets - has raised concerns that private lenders’ due-diligence standards are being stretched thin.

<blockquote>
The unraveling of those companies has stoked warnings from finance industry titans including JPMorgan Chase &amp; Co.’s Jamie Dimon, who cautioned that one “cockroach” likely portends more. Private credit executives such as Blue Owl Capital Inc.’s Marc Lipschultz pushed back, saying that the firm isn’t seeing rising defaults and noting that the highest-profile issues were in lending that banks led. -<a href="https://www.bloomberg.com/news/articles/2025-11-01/credit-fraud-fears-loom-after-blackrock-s-hps-zeros-out-bad-loan">Bloomberg</a>
</blockquote>

According to public records, Brahmbhatt founded Bankai Group in 1989 in Ahmedabad, India, initially manufacturing push-button telephones before expanding into telecom software and infrastructure. His firm later created technology subsidiary Panamax Inc. and, in 2017, launched Carriox Capital, a non-bank lender offering invoice financing and working-capital loans to telecom carriers.

HPS began financing Carriox Capital in late 2020, later expanding the facility to about $430 million by mid-2024, according to the Journal, while Bloomberg notes that HPS has "since written off its roughly $150 million exposure to zero." 

BNP Paribas helped fund nearly half of that exposure, the people said, though the French bank has declined to comment publicly. In its most recent earnings filing, BNP disclosed a €190 million ($220 million) loan-loss provision tied to a “specific credit situation.”
<a data-image-external-href="" data-image-href="/s3/files/inline-images/-1x-1_80%281%29.jpg?itok=Bds6-r4C" data-link-option="0" href="/s3/files/inline-images/-1x-1_80%281%29.jpg?itok=Bds6-r4C"><picture><figure role="group" class="caption caption-img inline-images image-style-inline-images"><img alt="" data-entity-type="file" data-entity-uuid="04df454e-8a9b-41d4-8fa6-3d6f2eb47fae" data-responsive-image-style="inline_images" height="400" src="https://zh-dev-046fffa0-2095-430f-bd04-a687fe941952.storage.googleapis.com/s3fs-public/styles/inline_image_mobile/public/inline-images/-1x-1_80%281%29.jpg?itok=Bds6-r4C" typeof="foaf:Image" width="500" /><figcaption>Bankim Brahmbhatt Bankai Group</figcaption></figure></picture></a>

The loans were held in two HPS-managed funds. A person close to BlackRock said the exposure represents a small portion of the firm’s $179 billion in assets under management and won’t materially affect fund performance.

Still, the incident underscores how even the largest asset managers are struggling to contain risks as they pour billions into direct lending.

<h2>A Trail of Fake Emails and Empty Offices</h2>

The unraveling began this summer, when an HPS employee spotted suspicious email addresses supposedly belonging to Carriox customers. The domains mimicked legitimate telecom firms but were slightly altered — a red flag suggesting someone was fabricating customer correspondence.

When confronted, Brahmbhatt assured HPS there was nothing to worry about, then abruptly stopped answering calls, people familiar with the matter said.
<a data-image-external-href="" data-image-href="/s3/files/inline-images/im-60956424_80.jpg?itok=Mhdlj5JN" data-link-option="0" href="/s3/files/inline-images/im-60956424_80.jpg?itok=Mhdlj5JN"><picture><figure role="group" class="caption caption-img inline-images image-style-inline-images"><img alt="" data-entity-type="file" data-entity-uuid="626aec05-26b5-43b1-a79f-1ebd559745be" data-responsive-image-style="inline_images" height="245" src="https://zh-dev-046fffa0-2095-430f-bd04-a687fe941952.storage.googleapis.com/s3fs-public/styles/inline_image_mobile/public/inline-images/im-60956424_80.jpg?itok=Mhdlj5JN" typeof="foaf:Image" width="500" /><figcaption>A building housing the offices of Brahmbhatt’s companies in Garden City, N.Y.</figcaption></figure></picture></a>

An HPS representative visiting the company’s Garden City, N.Y. offices found them shuttered. Neighbors said the office had appeared empty for weeks.

The lenders’ subsequent investigation, led by accounting firm CBIZ and law firm Quinn Emanuel, allegedly revealed that every customer email provided by Brahmbhatt’s companies to verify invoices over the previous two years was fake. One supposed customer, Belgium’s BICS, confirmed in writing that the invoices were “a fraud attempt.”

“Brahmbhatt created an elaborate balance sheet of assets that existed only on paper,” lawyers for the lenders wrote in their complaint.

<h2>Bankruptcy Filings and Vanishing Collateral</h2>

Brahmbhatt’s companies filed for Chapter 11 protection in August, alongside Carriox Capital II and related entities. The lenders allege that millions in pledged assets were quietly transferred to offshore accounts in India and Mauritius before the defaults.

On the same day the corporate bankruptcies were filed, Brahmbhatt himself sought personal bankruptcy protection, despite having previously provided a personal guarantee to his lenders.

HPS and its partners believe Brahmbhatt has since traveled to India, according to people briefed on the matter. His lawyer has not commented on his whereabouts.

For BlackRock and HPS, the direct financial hit appears modest. But for the broader private-credit industry - now rivaling the leveraged-loan market in size - the reputational damage could prove more lasting.

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Millions in pledged assets were quietly transferred to offshore accounts in India and Mauritius...


'Breathtaking' Fraud: Blackrock Ripped Off For $500 Million In Curious Case Of Bankim Brahmbhatt

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