First Brands Collapse Rattles Debt Investors

The auto parts supplier First Brands, known through its brands like STP oil (whose name stands for Scientifically Treated Petroleum), Prestone antifreeze and Simoniz car waxes, has filed for Chapter 11 bankruptcy protection, disclosing liabilities on 29 Sept 2025 exceeding $10 billion.  

This has come in the wake of creditors concern on the use of opaque off-balance-sheet financing (by keeping certain assets and liabilities off balance sheet, healthier financial metrics can be obtained).

First Brands are likely to disclose an issue with its factoring arrangements, factoring being a financing method tied to the future revenue of the company. The companies Board and creditors are investigating the issue.

Apollo Global Management (NYSE: APO), an asset-rich American asset management firm, due to publish Q3 results on November 4th, had a 1 year CDS on the debt of First Brands, paying out in the event of failure to make payments. This is a credit play, not an equity short per se, and only pays if First Brands suffers on its debt payments. The fact APO has maintained that position has been a signal to the market.

Greek-American investment manager Jim Chanos (short-seller of Enron - made money, short seller of Tesla - lost money) has slammed the "magical machine" of private credit in response.

US giant Tribune files Chapter 11, Tough Year for Media

The Tribune, owners of LA Times and Chicago Tribune, filed for Chapter 11 ("reorganization") bankruptcy (which allows the firm to remain in business, as opposed to a Chapter 7 or "liquidation" bankruptcy) having struggled with $13bn of debt it took on when going private last year. The go-private deal was led by Sam Zell, a real-estate billionaire. The Tribune was first published in 1847. A primer on bankruptcy basics in the US is detailed here.

Overall 2008 has been a tough year for media companies. Apart from the Tribune, Scotland's Herald, Sunday Herald and Glasgow Evening Times announced a merger of their editorial teams, and the Independent is moving in with the Daily Mail to save money on rent. One spark amidst the gloom, reports City AM, is the niche publisher Future, whose 2008 pre-tax profits were up 27% to £9.5m. Reports CityAm "Futures magazines are ...managing to pull in advertising because they focus on the niche. If a consumer is buying an Xbox or mountain biking magazine, the chances are they're going to buy some of the gear that's advertised inside". "We are producing content for absolute enthusiasts" said CEO Stevie Smith.

The UK's insurance sector, it has been reported, is doing well despite the credit crisis. Insurance (excluding brokers and auxiliary professionals) represents 1% of UK GDP employing 325,000 people. Figures from Swiss Re indicate the UK is the largest insurance centre after the US, with Japan coming in third place just above France.