A group of supply chain finance providers have more than US$866mn exposure to US car parts supplier First Brands Group, which has filed for bankruptcy protection.
First Brands Group has faced investor scrutiny for weeks after Jefferies reportedly struggled to raise a further US$6bn in debt for the Michigan company. Media reports said lenders had grown alarmed over the scale of First Brands’ off-balance sheet borrowing such as inventory and invoice financing.
The privately held group filed for Chapter 11 bankruptcy protection on September 28, declaring liabilities of between US$10bn and US$50bn, but estimated maximum assets of US$10bn.
Non-bank funders top an initial list of unsecured creditors included in the filing in a Texas court. Claims related to supply chain finance total US$866.5mn across 12 creditors, while four other creditors have undetermined claims.
Those creditors include 1977 O’Connor, which was acquired by Cantor in May, and Kuwaiti asset manager Wafra, which have claims of US$116mn and US$38mn respectively.
The contact person for both creditors, along with four other exposures which together total US$667mn, is a sales manager for working capital platform Raistone.
Raistone is listed as having its own uncalculated and disputed debt claim against First Brands through factoring arrangements. Raistone did not respond to a request for comment sent outside of US business hours.
Several creditors listed could not be reached or immediately identified. The creditor with the second-largest exposure, at US$208mn, is listed as Trade Finance Company, but the UK-headquartered company of that name tells GTR it has not engaged in business with First Brands.
Pemberton Capital Advisors is owed US$36.3mn by First Brands, according to the court document. Pemberton declined to comment.
CIT Group, a subsidiary of First Citizens BancShares, has exposure of US$84.4mn and London-headquartered supply chain finance platform Orbian is owed US$20mn. Neither company immediately responded to requests for comment.
Leucadia Asset Management (LAM), an alternative asset management arm of investment bank Jefferies, has an unknown exposure to the group through factoring arrangements, the filing says. LAM did not immediately respond to a request for comment.
An employee of trade finance fintech LiquidX is listed as the creditor contact for two claims totalling US$71mn, including US$24mn from London-headquartered investment firm Fasanara Capital.
Fasanara and LiquidX did not immediately respond when contacted.
First Brands, which markets parts such as brake systems, wiper blades and spark plugs, has reportedly secured US$1.1bn in debtor in possession financing, a form of bridging loan granted to companies seeking bankruptcy protection.
The group’s entities sell car parts to US automotive retailers, a sector that is a heavy user of supply chain finance partly due to the sector’s slow turnover of inventory.
This is a developing story.
