An auto parts giant is filing for bankruptcy

According to a statement released on September 29, U.S. auto parts supplier First Brands has filed for Chapter 11 bankruptcy protection in an effort to stabilize its business operations amid financial difficulties.

The company behind well-known aftermarket parts brands, such as Fram Filters, stated that its Chapter 11 cases will impact its operations in the United States, but that its global operations will remain unaffected. Furthermore, it said that it obtained $1.1 billion in debtor-in-possession financing from its first-lien lenders to ensure daily operations continue as the company works through its restructuring efforts.

In a statement, Chuck Moore, the Chief Restructuring Officer at First Brands, stated that the company rests on its strong portfolio of brands and its role in the auto parts supply chain.

"Today’s actions mark an important step toward stabilizing First Brands’ operations and securing a long-term future for the Company’s world-class portfolio of aftermarket automotive part brands," Moore said. "With committed funding from our key financial partners, we remain focused on supporting our employees, working with our valued suppliers, and delivering best-in-class aftermarket automotive technology for our customers globally. We are confident in the strength of First Brands’ industry-leading portfolio and the essential role we play in the automotive supply chain."

There is a good chance you have encountered a First Brands product at the auto parts store

If you work on your own car, there is a good chance that you've installed or encountered a product from First Brands during your trip to the auto parts store. Apart from well-known names like Fram filters and Raybestos brakes, it also owns some well-known windshield wiper brands, such as Anco and Trico, and is the license holder for Michelin-branded wiper blades. 

They also own the lightbulb division of Philips, as well as the remanufactured parts brand Cardone, the lift support brand Strong-Arm, the towing division of Westfalia, and brake brands Centric, Carlson, and International Brake Industries. Furthermore, they also own Bargman, Bulldog, Draw-Tite, Fulton, Reese, Tekonsha, Wesbar, Airtex, Autolite, Carter, Luberfiner, Hopkins, and Petroclear.

The parts company expanded its extensive portfolio of brands through a series of acquisitions that began in 2019, which were funded by loans from outside financiers. As is the nature of loans, complications arise if the debt owed to the parties that gave First Brands money is not paid. According to a September 25 report in the Financial Times, that exact thing happened when Carnaby Capital Holdings and several other financial entities that were linked to First Brands filed for Chapter 11 bankruptcy protection in Texas.

Furthermore, a Reuters report stated that the company, which filed for Chapter 11 in the Southern District of Texas, "disclosed assets exceeding $1 billion against more than $10 billion in liabilities."

Final thoughts

It should be noted that although First Brands is filing for bankruptcy, it doesn't exactly mean that Fram filters and Trico wiper blades will disappear from the shelves of your local auto parts retailers any time soon.

In the financial world, Chapter 11 is the type of bankruptcy filing that companies use to reorganize their finances, refine their business operations, and settle their debts. Many companies, including General Motors, Marvel Entertainment, Six Flags, and American Airlines, have actually financially recovered from such situations. Chapter 7 is the type of bankruptcy where companies are forced to sell off all their assets; think Circuit City and Borders.