First Brands enters Chapter 11

December 2025 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

December 2025 Issue

In late September, US automotive parts manufacturer First Brands Group filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Southern District of Texas, disclosing liabilities exceeding $10bn.

The filing marks the collapse of a company whose rapidly deteriorating financial position had alarmed debt investors in the weeks leading up to its insolvency. First Brands, headquartered in Michigan, manufactures aftermarket automotive components including wiper blades, fuel pumps, spark plugs and brake systems under brands such as TRICO, Autolite, Raybestos and FRAM.

To support business continuity, an ad hoc group of cross-holders agreed to provide $1.1bn in debtor-in-possession (DIP) financing, fully backstopped by certain members of the group. This funding is intended to maintain operations, fulfil customer orders, and meet obligations to vendors and partners. The company also filed a series of customary ‘first day’ motions, which, once approved, would allow it to continue paying employee wages and benefits, honour customer programmes, and meet post-petition obligations.

On 1 October, the court granted interim approval for First Brands to access $500m of the DIP financing. The remainder is subject to a final hearing scheduled for 29 October. As of 28 June, the company’s on-balance-sheet debt totalled approximately $6bn, including $4.9bn in first-lien term loans, according to Fitch Ratings. Court filings estimate the company’s assets at between $1bn and $10bn, with liabilities ranging from $10bn to $50bn.

The company had attempted to refinance its debt in August, but the process was abandoned after lenders demanded an independent review of its earnings and its extensive use of off-balance-sheet financing, particularly factoring agreements. These concerns were exacerbated by the Chapter 11 filings of affiliated financing entities under the Carnaby Capital Holdings umbrella, which had been used by First Brands to secure funding. Carnaby’s petition listed over $1bn in liabilities.

On 13 October, Patrick James, founder and chief executive, resigned amid scrutiny of the company’s accounting practices. He was replaced on an interim basis by Charles Moore, chief restructuring officer, a turnaround specialist with over 30 years of experience in the automotive sector. Mr Moore is overseeing stabilisation efforts and a potential court-supervised sale process.

The company’s financial distress has had ripple effects across the private credit market. Jefferies Financial Group disclosed a $715m exposure through its Point Bonita Capital fund, which had purchased receivables from First Brands. Payments from major retailers ceased abruptly on 15 September, prompting concerns about multiple pledges of the same receivables. UBS and BlackRock are also believed to have exposure.

First Brands’ global operations are expected to continue without interruption. The Chapter 11 proceedings apply only to its US operations. International subsidiaries, including those in Europe and Asia, are not part of the court-supervised restructuring.

According to Creditsafe, the company had been struggling to pay suppliers for over a year. Its ‘days beyond terms’ reached 55 days – five times the industry average. By early 2025, more than 57 percent of its outstanding invoices were over 91 days late.

JPMorgan analysts recently warned that the bankruptcies of First Brands and subprime lender Tricolor Holdings have heightened credit stress across financial markets. The opacity of private credit arrangements and the lack of disclosure around non-bank financial institutions have raised concerns among regulators and investors alike.

Despite the turmoil, Mr Moore remained optimistic. “With committed funding from our key financial partners, we remain focused on supporting our employees, working with our valued suppliers, and delivering best-in-class aftermarket automotive technology for our customers globally,” he said.

The outcome of the restructuring process remains uncertain. A creditors’ meeting is scheduled for 30 October, and further hearings will determine whether First Brands can emerge as a viable business or face asset sales.

Richard Summerfield