First Brands Group Files for Chapter 11, Discloses $10

Chapter 11 filing: First Brands Group, a major U.S. aftermarket auto-parts supplier, filed for Chapter 11 bankruptcy on Sept. 28, 2025 in the U.S. Bankruptcy Court for the Southern District of Texas ^[1]. In its petition the company listed $10–$50 billion in liabilities and $1–$10 billion in assets ^[2] ^[3]. The filing was preceded by the Sept. 24 bankruptcy of several related special-purpose entities (used for financing) and followed weeks of debt-market turmoil.
DIP financing: First Brands immediately secured $1.1 billion in debtor-in-possession financing (from an ad hoc group of its lenders) to keep operations running ^[4] ^[5]. First Brands said the DIP loan is “fully backstopped” and will allow it to continue paying employees, vendors and fulfilling customer orders during Chapter 11 ^[6] ^[7]. The company emphasized that only its U.S. operations are in bankruptcy; international business is expected to continue normally ^[8] ^[9].
Troubled history: First Brands had been under scrutiny for weeks. In August it paused a $6 billion debt refinancing amid lender demands for independent audits of its accounting ^[10]. Media reports in late September revealed that First Brands had nearly $2 billion of off-balance-sheet factoring debt that had not been properly disclosed ^[11]. This, along with a flurry of debt-funded acquisitions in prior years, left First Brands with an enormous debt load. Creditors and ratings agencies (Fitch, Moody’s, S&P) became increasingly worried, and by mid-September First Brands’ loans were plunging in value.
Key stakeholders: First Brands is owned by Ohio businessman Patrick James and operates well-known aftermarket brands (e.g. Raybestos brakes, TRICO wipers, FRAM filters) sold through chains like Walmart and O’Reilly Auto Parts ^[12] ^[13]. It employs thousands of workers globally (exact headcount not public). The company said it will continue paying wages and benefits under court supervision ^[14]. Chuck Moore, the appointed Chief Restructuring Officer, stated that the Chapter 11 filing is “an important step toward stabilizing First Brands’ operations and securing a long-term future,” emphasizing support for employees, suppliers and customers ^[15]. Among the largest unsecured creditors are hedge funds and banks involved in First Brands’ supply-chain financing; court documents list firms like UBS’s O’Connor Capital, CIT Group, Nomura, and SouthState Bank as major creditors ^[16]. Trade-finance lenders (supply-chain finance) held about $866 million in receivables tied to First Brands, and many of those claims are now at risk ^[17].
Market reaction: First Brands’ debt markets wiped out. In the week before the filing, its loans “plummeted in value” as bondholders braced for restructuring ^[18]. For example, a $2.0 billion senior loan due 2027 fell below 50¢ on the dollar, and its riskier junior debt traded under 20¢ ^[19]. By Sept. 25, First Brands’ first-lien term loans were quoted in the low 30s (about 30¢) on the dollar ^[20]. High-profile investors lost money: Millennium Management reportedly wrote down ~$100 million on its First Brands positions ^[21]. Major lenders (Jefferies, Millennium, SouthState, etc.) were exposed through invoice-backed facilities ^[22], and several hedge funds (Apollo Global, Diameter Capital) had earlier placed short bets on the debt (which they later closed) ^[23]. In response, Fitch and S&P aggressively downgraded First Brands’ credit, warning that only a bankruptcy could resolve its debt problem ^[24] ^[25].
Industry impact: Analysts and industry experts say the wider auto sector should see limited disruption. First Brands is primarily an aftermarket supplier, so automakers’ production lines (OEM supply chains) are not expected to be broadly affected ^[26]. (The company itself is a major supplier to the parts-retail segment, not an original equipment manufacturer.) Still, its collapse has rattled sentiment in the corporate debt market, especially following another auto-related bankruptcy (subprime lender Tricolor Holdings) just weeks earlier ^[27]. Experts note the First Brands case highlights the risks of opaque financing practices that have also surfaced in other fallen firms.
Future outlook: First Brands aims for an orderly restructuring. Its Chapter 11 petitions state the process is meant to “stabilize [the company’s] business operations and facilitate a value-maximizing transaction” ^[28]. In practice, this could mean selling the company (or pieces of it) or negotiating a debt-for-equity swap with creditors. With $1.1B in committed DIP funding, First Brands has breathing room to reorganize, but much work remains. Restructuring advisors (Weil, Lazard, Alvarez & Marsal and others) will negotiate with creditors and seek buyers or sponsors. Observers say the priority will be preserving the ongoing business and brand value; liquidation of the operating company would likely be a last resort given the size of its asset base. The bankruptcy cases are being jointly administered in Houston, Texas (the Southern District of Texas), with Judge Christopher M. Lopez overseeing affiliated cases ^[29]. Stakeholders will be watching the courts for court schedules and “first day” orders (already filed to pay wages, etc. under Chapter 11) ^[30].

Overall, First Brands Group’s Chapter 11 filing represents a major failure in the auto aftermarket space. It underscores the dangers of aggressive debt structures in a rising-rate environment. For now, the company has stayed open for business, suppliers will continue to ship parts, and customers (retailers and repair shops) will receive product normally. The big questions remain how much debt can be restructured, who will control the reorganized firm, and what this means for competitors. Any final outcome (sale or restructuring) will likely emerge only after lengthy court proceedings in the coming months.

Sources: First Brands’ Chapter 11 petition and press releases ^[31] ^[32] ^[33]; news reports from Reuters ^[34] ^[35], Bloomberg ^[36] ^[37], and industry media ^[38] ^[39] ^[40]; and expert commentary (ratings agencies, analysts) ^[41] ^[42] ^[43]. All figures and quotes above are from these primary sources.