First Brands to wind down key units as it seeks buyers amid bankruptcy crisis

Jan 26 (Reuters) - First Brands said on Monday it has begun winding down parts of its North American operations, including its Brake Parts, Cardone and Autolite units, while keeping its remaining businesses running as the company seeks buyers for the assets.

The wind-down excludes First Brands' other North American units and its operations outside the region, which continue to run while the company explores options for new owners.

The auto parts supplier, which makes filters, brakes and lighting systems, had filed for Chapter 11 bankruptcy protection in late September 2025, weighed down by heavy debt from rapid acquisitions and worsening finances.

First Brands borrowed $1.1 billion to start its bankruptcy but has only $190 million in remaining cash, which will sustain business operations only through the end of January, its attorney said in court earlier this month.

Its top lenders are resisting a request for a second loan of $700 million and are pushing for liquidation of parts of the business, the Wall Street Journal reported on Monday evening, citing people familiar with the matter.

When reached for comment on the WSJ report, First Brands referred to its statement from earlier in the day on winding down parts of its North American operations.

A U.S. bankruptcy judge last year ordered a $7 million independent investigation into First Brands after allegations surfaced that the company misused third-party financing for customer invoices.

"Over the past several months, we explored all available options to secure funding and advance the sale process for the Brake Parts Inc., Cardone, and Autolite businesses," said Charles Moore, interim CEO of First Brands.

The unraveling of First Brands highlights mounting strain in the auto-parts and financing sector, where other debt-laden players like subprime auto lender Tricolor Holdings have also collapsed, exposing how aggressive borrowing and opaque financing are pushing more companies toward failure.

Earlier this month, the company began a formal process to market and sell the company, either as a whole or in separate pieces, as part of its effort to exit Chapter 11.

Weil, Gotshal & Manges is advising First Brands on legal matters, with Lazard serving as investment banker, Alvarez & Marsal as the financial adviser, and C Street Advisory Group handling strategic communications as the company reduces certain business lines.