First Brands auto parts supplier collapses with $10B in debt — $2.3B reportedly missing from accounts
Oct 9, 2025
Key Points
- First Brands filed for Chapter 11 bankruptcy in late September with over $10 billion in debt, and $2.3 billion has gone missing from company accounts with unclear evidence it was ever received.
- First Brands used a side letter arrangement with Jefferies to raise funds at interest rates above loan limits, circumventing existing covenants that Jefferies itself had helped structure.
- Jefferies disclosed $715 million in exposure through Point Bonita Capital and UBS reported $500 million in exposure, both stemming from First Brands customers rather than direct holdings.
Summary
First Brands, an auto parts supplier, filed for Chapter 11 bankruptcy in late September owing more than $10 billion. Investigators appointed to the board have uncovered $2.3 billion missing from company accounts and are probing financing irregularities.
Jefferies and UBS disclosed substantial exposure. Jefferies-managed funds through Point Bonita Capital are owed $715 million from customers that bought First Brands parts. UBS, including through its O'Connor hedge fund unit, reported around $500 million in exposure, mostly through First Brands customers who owed money to the defunct supplier. Morgan Stanley analysts calculated Jefferies's total possible exposure as an investor in the funds at $44 million.
The board uncovered a side letter arrangement between First Brands and Jefferies for a trade financing facility that allowed First Brands to raise funds at interest rates above the limits set in its loan documents. Instead of formally breaching those caps, First Brands paid Jefferies a supplemental incentive fee. This structure violated covenants on existing loans that Jefferies had helped arrange and syndicate, and it blindsided investors.
One month before the September bankruptcy filing, Jefferies pitched investors on a $6 billion debt refinancing deal for First Brands. The effort failed after investor concerns and Jefferies' inability to obtain adequate diligence information from the company.
The $2.3 billion gap raises fundamental questions about fund flows. Internal communications show uncertainty about whether First Brands even received the money in the first place. One party inquired whether $1.9 billion was actually received and asked what happened to it. The response was stark: we don't know, with only $20 in their accounts.