First Brands Files for Bankruptcy Amidst Financial Strains
First Brands, a major player in the American automotive aftermarket, has filed for bankruptcy under Chapter 11. The company, which produces parts like windshield wipers, brakes, and filters under renowned brands like Trico and Fram, cited financial difficulties stemming from declining sales and intense competition.
First Brands' rapid growth was fuelled by debt-financed acquisitions, with around 70% of its revenue generated through debt financing. This heavy reliance on debt, coupled with a significant increase in long-term debt to approximately $6 billion, has put considerable strain on the company's financial health.
The final trigger for the bankruptcy filing was a bank seizing funds during a transfer. First Brands' liabilities are estimated to range from $10 to $50 billion, with liquid assets around $10 billion. Several of its subsidiaries and special-purpose entities in Ohio have also filed for bankruptcy, indicating a widespread impact.
First Brands' bankruptcy filing under Chapter 11 allows the company to continue operating while it works to restructure its debts and potentially find a buyer. The group's well-known brands, such as Anco and Raybestos, remain in demand in the automotive aftermarket industry. However, the future of these iconic brands and the thousands of jobs they support hangs in the balance.
