US auto parts supplier files Chapter 11 bankrutpcy; ‘billions in debt’ | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

When a bank lends you money to buy a house or a car, it looks at your overall finances. How much money do you make? How much debt do you have? How good have you been at paying off past debts?

It’s supposed to work that way in the business world.

Businesses, however, can be very clever when it comes to how they borrow money. That can be a positive, but it can also get a company into trouble.

Imagine if the bank writing your mortgage did not realize that half of your income actually went to paying off a debt it did not know about. If that happened, it might loan you money you can’t afford to pay back.

That happens in the business world and it’s something that people who track First Brands Group, an American manufacturer of various auto parts brands, have been worried about for a while.

Carnaby/First Brands Group files for Chapter 11 bankruptcy

Carnaby Capital Holdings, LLC filed for Chapter 11 bankruptcy protection in Southern District of Texas on September 25 listing $500,000,001-$1 billion in assets and $1 billion-$10 billion in liabilities, according to court filings.

A number of related filings were reported as well, This includes multiple filings under various iterations of the Carnaby name.

First Brands Group has been under intense scrutiny for some of its borrowing practices, according to the Financial Times.

First Brand has come under intense scrutiny for its use of off-balance-sheet debt tied to invoices and inventory.

Some lenders fear this financing was poorly disclosed in the main operating entity’s balance sheet, making it difficult for creditors to know how much debt it had in total.

Certain creditors estimate that First Brands raised as much as $10bn in debt and off-balance-sheet financing. The filing for the group of Carnaby companies states that they have estimated liabilities of between $1bn and $10bn, against assets of just $500mn-$1bn.

The Chapter 11 bankruptcy filing came after efforts to refinance $6 billion in debt failed.

First Brands Group has dozens of brands.

Image source&colon; Getty Images

First Brands Group bankruptcy details

Filing Date: September 25, 2025
Jurisdiction: U.S. Bankruptcy Court for the Southern District of Texas
Filing Entities: First Brands Group LLC and several affiliated companies, including Carnaby Capital Holdings
Signatories: Patrick James, founder and CEO of First Brands, signed the filings
Debt Exposure: Approximately $6 billion in debt, with over $4 billion in off-balance-sheet liabilities related to customer invoice factoring and supply-chain financing.

Source:

Financial Times

A look at First Brands Group

First Brands Group owns a lot of well-known auto parts brands and it also manufactures product lines under names it licenses including Michelin

The company shared its deep roster of products on its website.

First Brands Group is a global automotive parts company that develops, markets and sells premium products through a portfolio of market-leading brands including: Raybestos complete brake solutions, Centric Parts replacement brake components, StopTech performance brakes, Fram filtration products, Luber-finer filtration products, Trico wiper blades, Anco wiper blades, Michelin licensed wiper blades, AirTex and Carter fuel and water pumps, Autolite spark plugs, StrongArm lift supports, Carlson brake hardware, Cardone new and remanufactured replacement parts, and our towing & trailering portfolio composed of Reese, Drawtite, Bulldog, Tekonsha, Fulton, Westfalia along with Hopkins universal owned and licensed brands and Philips licensed aftermarket lighting.

The company has been struggling for a while and many saw its collapse coming

First Brands Group financial collapse

Debt Trading Decline: First Brands’ senior loans dropped to about 32 cents on the dollar, reflecting investor concerns.
Loan Refinancing Efforts: A $6 billion loan refinancing was halted in August due to lender demands for a quality-of-earnings report
Investor Actions: Apollo Global Management purchased credit-default swaps against First Brands’ debt, signaling a bet on its financial distress The Wall Street Journal

Goldman Sachs analysts told clients just before the Chapter 11 filing that they had “serious doubts” that the auto-parts supplier First Brands Group will be able to avoid bankruptcy.

More Bankruptcy:

“In a note on Wednesday morning (Sept. 24), the analysts expressed concern about First Brands’ financing arrangements, some of which carry interest rates north of 30%, according to a copy of the message seen by Bloomberg. The analysts wrote that their research was based on public filings,” Bloomberg reported.

Fitch had also recently downgraded First Brand Group’s debt rating. That was done based on what the analysis firm saw as an “increased refinancing risk.”

In July 2025, FBG launched a transaction to refinance all its debt, with a goal of completing the refinancing well ahead of its first lien debt going current in March 2026. The refinancing included an upsized ABL revolver, a floating- and fixed-rate first lien USD term loans, a floating-rate first lien EUR term loan and a significantly upsized second lien term loan. The company subsequently paused the refinancing following an investor request for a QoE report from a top accounting firm. Recent reports suggest the QoE will be ready around mid-October.

A Quality of Earnings (QoE) report is an accounting assessment performed by a third-party firm to evaluate a company’s historical financial performance, focusing on the accuracy and sustainability of its earnings. They are generally done when a company is being acquired but can be used to verify creditworthiness.

First Brands Group timeline of key events

2020-2024: FBG expands rapidly through acquisitions, increasing revenue from $1 billion in 2020 to $5 billion by 2024.
March 2021: FBG secures a $4.5 billion first-lien term loan due in 2027.
July 2025: Fitch Ratings downgrades FBG to ‘B’, citing increased refinancing risk.
August 2025: FBG cancels a planned $6 billion loan refinancing due to lender concerns over financial transparency.
September 2025: FBG’s debt trades at distressed levels, with senior loans at 45–46 cents on the dollar and junior loans even lower.
September 22, 2025: FBG hires Lazard, Alvarez & Marsal, and Weil Gotshal & Manges to assist in restructuring efforts.
September 25, 2025: FBG files for Chapter 11 bankruptcy protection, citing approximately $6 billion in debt and over $4 billion in off-balance-sheet liabilities

Source: Bloomberg

FBG is seeking a debtor-in-possession loan of approximately $1.25 billion to support its operations during the bankruptcy process. “This financing would take precedence over existing debt and is crucial for the company’s restructuring efforts, Bloomberg Law reported.

The company has hired restructuring advisors, including Lazard, Alvarez & Marsal, and Weil, Gotshal, & Manges, to navigate the bankruptcy proceedings and develop a viable plan for debt restructuring.