30.09.2025 08:51
The leading U.S. automotive parts manufacturer, First Brands, has filed for bankruptcy protection due to debts exceeding $10 billion. This development is being regarded as one of the largest collapses in the private debt markets in recent times on Wall Street, raising serious concerns among investors.
Ohio-based First Brands filed for Chapter 11 bankruptcy protection in the Southern District of Texas Bankruptcy Court on Sunday. While the exact amount of debt was not specified in the filing, it was stated that liabilities are between $10 billion and $50 billion, and the company's assets are in the range of $1 billion to $10 billion.
HIDDEN DEBTS REVEALED
According to the Financial Times, First Brands disclosed $5.9 billion in long-term debt and approximately $1 billion in cash reserves to its creditors in March. However, due to off-balance-sheet financing methods, billions of dollars in additional liabilities were identified. Therefore, a special committee was established to review these opaque arrangements during the bankruptcy process.
PRODUCTION WILL NOT BE DISRUPTED, FINANCING READY
The company secured $1.1 billion in new funding from its creditors to continue its operations during the restructuring period. This fund will be used to ensure the uninterrupted continuation of production operations as well as for the restructuring of debts.
CRISIS OF CONFIDENCE ON WALL STREET
The sudden collapse of First Brands has raised questions about the reliability of risky credit markets. Recently considered safe, corporate loans rapidly lost value before the bankruptcy filing, dropping to a third of their nominal value. Lower-tier debts changed hands for just a few cents.
OVERSEAS OPERATIONS SAFE
First Brands, owned by Malaysian entrepreneur Patrick James, had made numerous acquisitions through aggressive borrowing over the past decade. The company, which has many manufacturing facilities in the U.S., did not include its operations in Romania, Mexico, and Taiwan in the bankruptcy process. Charles Moore from Alvarez & Marsal was appointed as the chief restructuring officer to manage the restructuring.