BlackRock’s private-credit arm — acquired via HPS Investment Partners (HPS) — and several co-lenders are suing for the recovery of more than $500 million following what they describe as a “breathtaking” fraud. According to the lawsuits, U.S.-based telecom services firms affiliated with Bankim Brahmbhatt allegedly fabricated years of customer receivables used as collateral for asset-based lending.
📊 The Mechanics of the Fraud
Lenders began financing Brahmbhatt-affiliated entities (via a vehicle named Carriox Capital II and others) starting around September 2020. HPS’s exposure reportedly reached about $385 million in early 2021, growing to nearly $430 million by August 2024.Loan structure: the borrower pledged receivables (“accounts-receivable financing”) from telecom customers as collateral — a form of asset-based lending reliant on the existence and collectability of receivables.In July 2025, an HPS employee flagged irregularities: customer email domains didn’t match the claimed telco firms, and responding addresses were fake. An internal investigation and later court filings allege every email provided to substantiate two years of invoices was fake.Lawyers for the lenders contend that assets pledged as collateral were moved offshore (India and Mauritius) and never available for recovery.
👥 Who’s Involved
Bankim Brahmbhatt: Indian-origin businessman and owner of U.S.-based telecom firms including Broadband Telecom and Bridgevoice, which allegedly supplied the fake receivables.BlackRock / HPS: HPS held the loans via two credit funds. HPS told clients the exposure was a small part of its ~$179 billion AUM, saying the fraud “will not meaningfully impact” overall performance.Co-lenders: BNP Paribas reportedly participated, adding roughly $220 million to its loan-loss provisions tied to this “specific credit situation.”
🧑⚖️ Legal & Financial Fallout
In August 2025, Brahmbhatt and several finance-arm vehicles (including Carriox Capital II and BB Capital SPV) filed for Chapter 11 bankruptcy, as did Brahmbhatt personally.The lenders’ lawsuit details their investigation of fake domains and emails, citing Belgian telecom company BICS, which denied any relationship with one of the purported debtor-customers.Recovery prospects depend on tracing offshore asset transfers, debtor cooperation, and bankruptcy restructuring outcomes.
📉 Broader Implications
Private credit scrutiny: The case emerges amid heightened regulatory and investor scrutiny of private-credit markets for transparency and risk.Collateral-integrity risk: Highlights that even major institutions can be vulnerable when relying on receivables or pledged income streams with weak verification.Reputational/earnings risk: Though HPS says the hit is immaterial to its AUM, there’s headline risk for BlackRock and its investors, given the importance of trust in leveraged and alternative credit strategies.Cross-border complexity: The India/Mauritius transfers illustrate how global asset dispersion complicates tracing and enforcement.
🔍 What’s Still Unclear
Criminal charges: As of now, there are no publicly disclosed criminal indictments — the matter remains in civil litigation.Exact recoverable sum: While exposure exceeds $500 million, the recoverable amount remains unknown.Asset mapping: The full inventory of pledged, transferred, or lost assets remains opaque in public filings.
For BlackRock and other major creditors, the case is a sharp reminder that in the era of alternative credit and asset-backed financing, due diligence must go beyond numbers to validate the underlying collateral reality.
What seemed to be a legitimate receivables-backed loan turned out to be a paper house of cards.
For the broader markets, this episode flags risk in shadow-lending channels, especially as they intersect with global asset managers’ balance sheets.
As creditors work to claw back value and investigate offshore trails, the true test will be transparency, enforcement, and whether this shakes confidence in similar private-credit strategies.
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