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First Brands Group 1L TL Trades in the 30s as Entities With Apparent Link to Troubled Auto Supplier Seek Bankruptcy Protection in SDTX

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On Wednesday night several entities that appear related to First Brands Group filed chapter 11 in the Bankruptcy Court for the Southern District of Texas. First Brands Group has been mulling its own bankruptcy filing, as reported, and is working with law firm Weil Gotshal. The privately owned auto parts maker had a payment on its supply-chain financing come due Sept. 24, according to sources.

The chapter 11 petitions, filed by Carnaby Capital Holdings and affiliated entities, are signed by First Brands Group founder and CEO Patrick James, in his capacity as manager, president and CEO of the Carnaby debtors. The Carnaby cases have been assigned to Judge Christopher M. Lopez.

The board resolutions in the petitions identify certain debtor entities as “SPE Subsidiaries,” including Carnaby Inventory II LLC and Carnaby Inventory III LLC.

On Wednesday, Octus noted that a trading desk and several investors learned of Carnaby’s ties to First Brands Group via equipment and inventory financings. Specifically, AB CarVal Credit Opportunities Fund filings ​​from March 6 and May 27 show that the issuer name for what appears to be the same debt in the two filings was changed from First Brands Group LLC in March to Carnaby Inventory II LLC in May.

Although the petitions do not explicitly reference First Brands Group, the companies are further linked by their shared corporate address in Cleveland. The Carnaby petitions list the debtors’ address as 127 Public Square Ste 5300, Cleveland, Ohio, which is the address of the corporate offices of First Brands Group. The debtors are also represented by Weil Gotshal as legal counsel.

This morning, trading levels of First Brands Group’s first lien term loans were quoted in the low 30s context, according to sources, who noted that volume was low. The same debt was quoted in the low 40s context on Wednesday, as reported.

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