Home / Business and Economy / First Brands Shutdown: Lenders Say No
First Brands Shutdown: Lenders Say No
27 Jan
Summary
- First Brands shutters Brake Parts, Cardone, and Autolite.
- Lenders refused additional funding for operations.
- Founder Patrick James sued over alleged diverted funds.
Bankrupt auto-parts supplier First Brands is shutting down portions of its North American business after lenders declined to provide further financial support. The company initiated the wind-down of its Brake Parts, Cardone, and Autolite divisions. First Brands aims to sell its remaining businesses, which include filters, wipers, pumps, and accessories.
Lenders, including Oaktree Capital Management and Mudrick Capital Management, reportedly balked at providing a second loan for ongoing operations. These lenders may acquire the remaining assets using their debt as part of their offer. First Brands filed for Chapter 11 in September, facing allegations of financial impropriety by its founder and former CEO, Patrick James.
An earlier $1.1 billion debtor-in-possession loan proved insufficient as the company's financial issues were more severe than initially understood. First Brands anticipated running out of money by the end of January. A bankruptcy judge prevented the company from accessing certain collateral, further limiting its liquidity. A hearing is scheduled for Thursday to approve the company's bidding procedures.
