First Brands Group, the parent company of hitch and towing brands Bulldog, Draw-Tite, Fulton, Reese and Tekonsha, as well as Hopkins Manufacturing, filed for bankruptcy protection last week.
In its Chapter 11 bankruptcy filing, the company cited liabilities ranging from $10 billion to $50 billion, with assets from $1 billion to $10 billion.
Two weeks ago, First Brands Group executives contacted lenders to refinance their debt obligations, leading to inquiries about the company’s finances, according to reporting from The Wall Street Journal, Bloomberg and Reuters.
Reuters reported that bankers and creditors were racing to restructure First Brands’ debt as investor confidence eroded leading up to the filing, with several of its associated companies also declaring bankruptcy.
Raistone, the finance company that called for an investigation into First Brands, facilitated First Brands’ short-term borrowing. Raistone derived 80% of its revenue from First Brands. The company has already cut roughly half of its employees.
In an acquisition spree that included buying Horizon Global, the former parent company to the hitch/towing brands, First Brands grew to employ 26,000 workers with $5 billion in revenues in 2024, Reuters said, citing a presentation to investors. The company’s loans plummeted in value as bondholders prepared for a debt restructuring. Reports cited several Wall Street lenders and hedge funds with exposure to First Brands’ supplier invoice-linked facilities.
The latest filings reveal that First Brands and its related intermediaries had more than $8 billion of debt and inventory-backed financing. The figure is not linked to its customer and supplier invoices.
One of First Brands owner Patrick James’ subsidiary companies, Carnaby Capital Holdings, was among over a dozen affiliated companies that filed for bankruptcy along with First Brands. Carnaby listed assets of over $500 million and liabilities exceeding $1 billion. A note from analysts at S&P Global said the credit-rating agency believed Carnaby was a source of off-balance sheet financing used by First Brands to fund its working capital.
On Wednesday, a First Brands financial partner made an emergency court filing calling for an independent investigation into $2.3 billion tied to the company that “simply vanished.”
On Thursday, Reuters reported that the Justice Department launched an inquiry into the bankruptcy. Reuters said the Justice Department is probing the company and its dealings with creditors, although the probe is at an early stage.
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