Home / Business and Economy / Auto Parts Giant Faces Cash Collateral Threat
Auto Parts Giant Faces Cash Collateral Threat
24 Dec
Summary
- A key lender is seeking to restrict First Brands' access to cash.
- Collateral values at California and Illinois warehouses have fallen.
- Evolution Credit Partners advanced up to $300 million to First Brands.
First Brands Group is facing a critical challenge as its trade finance partner, Evolution Credit Partners, has threatened to revoke access to essential cash collateral. This move comes after the value of collateral held by First Brands in warehouses located in California and Illinois reportedly dropped below the agreed-upon thresholds of $170 million and $165 million, respectively. As of December 12, these holdings were valued at approximately $100 million each, creating significant deficits.
Evolution Credit Partners stated it filed a motion with a Texas bankruptcy judge to terminate First Brands' access to this crucial funding unless "curative actions" are taken. These discussions were an attempt to resolve the matter without judicial intervention, but have not yielded a successful outcome. First Brands, which is currently navigating Chapter 11 bankruptcy proceedings, relies on this cash collateral to operate.
