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Apollo gained access to information on part of First Brands’ off-balance sheet funding before scrutiny of the auto parts supplier's financing arrangements clouded its future, according to 9fin sources.

The firm was offered a chance to take part in a working capital facility for First Brands last year, sources said. Apollo has a sizable structured financing arm — Atlas SP — which was added to its platform through a deal with Credit Suisse in 2023.

The financial materials that Apollo accessed as a result of being invited to participate could have illuminated First Brands’ unusual capital structure and associated credit risks, sources said.

Separately, Apollo’s short position against the auto parts supplier’s debt has either proved prescient or become a self-fulfilling prophecy as concerns and confusion about the company’s off-balance sheet working capital facilities have contributed to its swift collapse — information that would otherwise have been very hard to access.

Apollo held a short position against First Brands — that may have taken different forms including a complex CDS arrangement — for at least a year, according to some market participants, though its bet did not garner broader attention until media reports surfaced earlier this month. The firm stood to benefit if First Brands was unable to service its debt.

Notably, Apollo’s private equity arm has several portfolio companies that compete with First Brands, including Tenneco and ABC Technologies. It is unclear whether the firm’s look into First Brands is directly linked to its short position.

Debt-fueled growth

Before being in the limelight, First Brands was a little-known company making windshield wipers and water pumps, founded by Malaysian businessman Patrick James.

James's Crowne Group bought Missouri-based windscreen wiper maker Trico in 2014 and renamed it as First Brands Group in 2020 following more acquisitions.

The company issued billions of dollars of debt along the way. Many of the assets it bought have been underperforming, prompting First Brands to aggressively cut costs, according to Moody’s note on 22 September.

In August, First Brands sought to raise around $6bn in term debt to pay down $4.8bn in floating-rate obligations due in 2027. But the company paused the refinancing after buysiders requested it conduct a quality of earnings report, led by Deloitte and expected to be completed next month.

It was not clear until recently the full extent of private credit involvement, given the bulk of it is off balance sheet asset-backed financings.

The private nature of First Brands founder and controlling shareholder James has added to investor anxiety over the company’s financial disclosures, the sources said.

Several sources have pointed out that there had been scrutiny of the company’s factoring facilities in the past, and nothing fraudulent has ever been revealed.

Financing needs

Meanwhile, lawyers at Gibson Dunn have been rounding up more lenders in recent days to develop a steering committee holding a sufficient amount of the term loan, one of the sources said. It is likely that a potential DIP will be available to all term loan lenders on a pro rata basis, the source said.

The urgency to line up a bankruptcy loan comes as First Brands had no commitment on its factoring facilities — so they could be pulled at any time, sources said. Any disruption to the company's supply chain financings could spur additional needs for liquidity, which was over $800m at the end of June 2025, Moody’s wrote. As reported, First Brands may need $1bn-$1.6bn in DIP financing.

Several entities linked to First Brands already filed for bankruptcy in the Southern District of Texas on 25 September. That includes Carnaby Capital, owned by Viceroy Private Capital, which has bought some payables of First Brands and securitized them. Patrick James is listed as president and chief executive officer of the various Carnaby units.

First Brands has been getting advice from Lazard and Weil. A majority creditor group has organized with Evercore and Gibson Dunn, while minority lenders banded together with Glenn Agre.

Quotes on the company’s dollar term loan B due 2027 veered deeper into distressed territory to 45.7 cents on 25 September, down from 60.5 on 22 September, according to 9fin.

First Brands and Apollo declined to comment. Representatives at Weil, Lazard, Evercore and Gibson Dunn did not respond to requests for comment.

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