As private lenders play an expanding role in how large companies finance growth — and survive failure — the bankruptcy of the giant auto parts manufacturer First Brands Group is emerging as a test case of corporate governance in the age of private credit.
What began as a routine Chapter 11 filing has turned into a high-stakes standoff between lenders and court-appointed managers, with hundreds of millions of dollars in emergency financing, thousands of jobs, and the future of a major supplier to the U.S. automotive aftermarket at stake.
First Brands, which filed for bankruptcy in late September after disclosing more than $10 billion in liabilities, is now operating under the direction of restructuring firm Alvarez & Marsal and Chief Executive Charles Moore, who was initially appointed as chief restructuring officer.
According to people familiar with the case, lenders providing debtor-in-possession (DIP) financing have grown increasingly frustrated with the pace of the restructuring team and the lack of clarity around the company’s financial condition.
As reported by GetTransport, lenders are expressing dismay with the situation at First Brands and the failure of interim management to provide any stability to the company.
The company borrowed roughly $1.1 billion in emergency funding at the outset of the case to maintain operations. But recent court filings warn that First Brands could run out of cash by early February without additional financing.
Lenders have sharply questioned how the initial rescue funds were depleted within weeks and why, months into the case, the restructuring team has not publicly detailed the scope of the fraud the team has alleged or identified those responsible, according to people briefed on the discussions.
Earlier this month, Moore sought an additional $800 million in financing to address the looming liquidity shortfall. Creditors resisted, and the company instead moved to accelerate a court-supervised sale, giving potential buyers about 20 days to submit bids. That push toward a rapid sale has intensified scrutiny of the interim management’s decisions made during the restructuring.
In November, the company received court approval to redirect a portion of DIP financing to a non-debtor affiliate, Ultinon, a move that has since drawn questions from some creditors about the use of bankruptcy-protected funds outside the core debtor entities.
In addition, First Brands in January announced plans to shut down its Dalton, Georgia, foundry and Eagle Machining facility. Dalton is the only U.S.-based producer of certain aftermarket brake rotors and has been viewed by some customers as strategically important to domestic supply chains.
People familiar with the matter said some lenders were surprised by the closures and were not aware of formal consultations with major customers before the decision.
Beyond that, court filings show that more than $177 million in professional fees have been approved in the case. Creditors have pushed for reductions in advisory costs, citing concerns about performance and the overall direction of the restructuring.
Tensions escalated this week after Lazard, the company’s investment bank, circulated marketing materials to prospective buyers. Several lenders who reviewed the package said the financial projections diverged sharply from earlier figures, including lower revenue and negative EBITDA, according to people familiar with the matter.
Speaking on condition of anonymity, a restructuring consultant with experience in the automotive sector said the case underscores the difficulty of managing a global manufacturer under bankruptcy protection.
“Global operations, a complex customer mix, and tens of thousands of employees — that’s a hard machine to keep running,” the consultant said. “Add disputed accounting and unconventional financing, and the margin for error gets very small.”
First Brands manufactures and distributes aftermarket auto parts, including brakes, filters, lighting systems, and towing accessories, under brands such as FRAM, Raybestos, Trico, Autolite, and Reese. The company has said it is pursuing a court-approved sale of all or parts of the business, with the goal of completing the process in the first quarter of 2026.
For now, lenders are weighing whether to provide additional financing to carry the company through the sale — a decision that may determine whether First Brands emerges as a viable business or becomes a high-profile debacle in the industrial sector during the era of private credit.
Jared Whitley is a longtime DC politico, having worked in the US Senate and White House. He has an MBA from Hult business school in Dubai.
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