Billions of Dollars 'Vanished': Low-Profile Bankruptcy Rings Alarms on Wall Street

[Omaha Steve]

http://archive.today/GsWAs

The unraveling of First Brands, a midsize auto-parts maker, is exposing hidden losses at international banks and “private credit” lenders.

Rob Copeland

By Rob Copeland
Oct. 10, 2025

When First Brands, an auto-parts maker, filed for bankruptcy late last month, it was not the sort of event that would typically draw attention in the world’s financial capitals.

A midsize manufacturer of pumps, filters and other under-the-hood products sold at retailers like AutoZone and Walmart, the company had expanded in recent years and had, it would appear, simply grown too quickly.

But now, the company is at the center of swirling milieu on Wall Street and beyond over the loans that fueled its rise and the questionable accounting, some of its creditors say, that preceded the fall.

Some well-known firms in international finance have been swept up in the fallout from company’s collapse, in some combination of losses, finger-pointing and embarrassment at having missed the signs of danger. That group includes Jefferies, the New York investment bank that arranged much of First Brands’ financing; UBS, the Swiss bank that provided a big chunk of the money; and BlackRock, which funneled money to an intermediary that lent it to the company.

FULL story at link above.


First Brands expanded rapidly over the past decade by buying 15 competitors, including brands like the spark plug maker Autolite.Credit...Bloomberg

[Irish_Dem]

1. Not vanished. STOLEN.

[UpInArms]

2. The waves are going to ripple out

But it is not solely the sum of the potential losses that has so many financiers on edge. Many of the loans to First Brands originated from the booming, loosely regulated world of “private credit.”

Unlike traditional banks, private credit lenders say, they have the ability to lend quickly because they understand complicated, risky businesses and do not need to worry about repaying ordinary depositors or reporting public earnings.

Trillions of dollars have been plowed into private credit over the past decade, principally from pension funds, endowments and other groups that rely on such investments to fulfill obligations to retirees and the like.

[Ritabert]

3. Here's the problem..

The problem was that First Brands had pledged money from the same invoices to multiple lenders, essentially double or triple counting what it expected its customers to be paying, according to the bankruptcy filings.
....
Because these arrangements were held off the company’s balance sheet, creditors say they were not aware that the same invoices were pledged more than once.

[Tetrachloride]

4. If I were a creditor, I'd want my money back.

[Ritabert]

7. Unfortunately I think it's gone for good.

Last edited Sat Oct 11, 2025, 11:10 AM - Edit history (1)

[bucolic_frolic]

5. How does private credit differ from mortgage-backed securities?

The firms mentioned, and there are more, are intertwined with investment names we all know and perhaps utilize. If this is the tip of the iceberg, it has potential to be larger than the subprime mortgage crisis. These are not homes, even in aggregate, they are companies.

How does private credit differ from mortgage-backed securities? In terms of shaky equity and loose lending, I suspect not by a lot.

And on edit, to add: Private equity as well as public companies that manage brands - essentially a collection of brands culled from parts of other companies that divested or went bankrupt - are common. How many of these might have suspect balance sheets?

A quick search reveals several well-known names that held brands as part of their business:

Sears, Instant Brands, Forma Brands, JC Penney, Liberated Brand, Franchise Group, Ascena Retail, Authentic Brands.

Typically the brands are acquired because they make a quality product but are no longer profitable. The new parent aims to fix them.

That being said, the life-cycle of capitalism is venture capital, IPO, then a series of debt extractions by wealthy people or companies resulting in repeated bankruptcies, and finally collapse in some cases. These things are not strictly tied to the economic cycle, they go on all the time. It's how you make money if you're an owner along the way!

[Johonny]

6. Im going to guess

Over expanded lead to exposure and tariffs was the one thing they absolutely couldn't tolerate...

[Omaha Steve]

8. Kick