First Brands Bankruptcy Sends Shockwaves Through Private Credit Markets

First Brands' abrupt Chapter 11 filing has rattled Wall Street, exposing $10bn+ in liabilities and triggering a collapse in loan valuations. The Ohio-based auto parts maker—producer of Carter fuel pumps and Michelin wiper blades—listed assets of just $1bn-$10bn against debts potentially exceeding $50bn.

Senior debt now trades at 33 cents on the dollar after loans plummeted from stable prices to distressed levels within weeks. "This is debt getting ahead of reality," remarked one analyst, referencing billions in off-balance sheet financing now under bankruptcy committee scrutiny.

The downfall of Patrick James' manufacturing empire reveals cracks in opaque inventory financing structures. While $5.9bn long-term debt was disclosed, creditors fear hidden obligations tied to receivables may surface during liquidation.