First Brands Group, an auto-parts maker, is close to finalizing a bankruptcy settlement and is in the process of selling several business units, including Walbro, Horizon, TMD, and Pumps. These sales are being supported by major automakers, like Ford and GM, who have provided prepayment for parts to fund First Brands' operations in recent weeks.
The company initially filed for bankruptcy protection on September 28 with over $9 billion in liabilities. It secured a new $1.1 billion loan from existing lenders at the start of its bankruptcy proceedings, but by January, much of this cash had been spent. A judge recently approved access to the remaining $600 million of this emergency funding to prevent immediate shutdown. In January, confidential mediation sessions began between First Brands, its senior lenders, and unsecured creditors to resolve disputes over debt and asset ownership.
While a settlement between lenders and junior creditors is nearing completion, the asset sales are proceeding without a full agreement on how the proceeds will be divided among the company's stakeholders. The company anticipates a two-week mediation period to finalize this distribution. Additionally, First Brands received a second chance to pursue court approval for a liquidation proposal that involves raising money through lawsuits against its former top officers and lenders, with a hearing scheduled for June 12.
