First Brands, Parent Company of Fram Filters, Files for Chapter 11 Bankruptcy Amid Financial Difficulties
First Brands, a major U.S. automotive parts manufacturer, has initiated Chapter 11 bankruptcy proceedings to address its financial challenges and reorganize its business. The company, which owns several well-known aftermarket brands such as Fram Filters and Raybestos brakes, announced this step to ensure operational stability. Despite the bankruptcy filing, First Brands has secured substantial financing of $1.1 billion from its primary lenders, aimed at sustaining its day-to-day operations during the restructuring period. The company has clarified that its international business units will continue to operate without disruption, reinforcing its commitment to employees, suppliers, and customers within the global automotive supply chain.
On September 29, First Brands released a formal statement confirming its application for Chapter 11 bankruptcy protection. This legal action is a strategic move designed to help the company navigate its financial woes and develop a viable long-term strategy. The bankruptcy filing specifically impacts its U.S. operations, while its extensive global network of brands will remain fully functional. Chuck Moore, the company’s Chief Restructuring Officer, highlighted the company's robust brand portfolio and its integral position within the automotive aftermarket industry as key assets that will facilitate its recovery. He expressed confidence in the company's ability to emerge stronger from this restructuring process, thanks to the secured funding and a steadfast focus on operational excellence.
First Brands boasts an impressive array of automotive aftermarket products, many of which are commonly found in auto parts stores across the United States. Beyond its flagship Fram filters, the company's portfolio includes Raybestos brakes, Trico and Anco windshield wipers, and even the licensed production of Michelin-branded wiper blades. The company also holds the lightbulb division of Philips and owns other notable brands such as Cardone (remanufactured parts), Strong-Arm (lift supports), Westfalia (towing), Centric, Carlson, and International Brake Industries (brake components). Additionally, its vast holdings encompass brands like Bargman, Bulldog, Draw-Tite, Fulton, Reese, Tekonsha, Wesbar, Airtex, Autolite, Carter, Luberfiner, Hopkins, and Petroclear, demonstrating its pervasive presence in the automotive sector.
The current financial situation at First Brands stems from a series of aggressive acquisitions initiated in 2019, which were largely financed through external loans. These expansion efforts eventually led to significant debt obligations. A report from the Financial Times on September 25 indicated that Carnaby Capital Holdings and several other financial entities associated with First Brands also sought Chapter 11 bankruptcy protection in Texas. Furthermore, a Reuters report revealed that First Brands' bankruptcy filing in the Southern District of Texas cited assets exceeding $1 billion against liabilities greater than $10 billion, underscoring the scale of its financial challenges.
It's crucial to understand that a Chapter 11 bankruptcy filing does not necessarily signal the immediate demise of brands like Fram filters or Trico wiper blades from retail shelves. Chapter 11 is a legal framework that allows companies to restructure their debts and operations under court supervision, aiming for a successful turnaround. Historically, numerous major corporations, including General Motors, Marvel Entertainment, Six Flags, and American Airlines, have successfully navigated Chapter 11 proceedings and re-emerged as financially sound entities. This contrasts sharply with Chapter 7 bankruptcy, which typically involves the liquidation of all company assets, as seen with past retailers like Circuit City and Borders.