RMB 76 Billion: Another Giant Declares Bankruptcy

Collapse of a leveraged roll‑up

First Brands Group, the North American auto‑parts consolidator behind household names such as FRAM, Raybestos and Autolite, has filed for Chapter 11 bankruptcy protection, it has been reported. The company’s liabilities reportedly exceed $11 billion (about RMB 76 billion), while realizable assets fall well short — a shortfall that places the case among the largest supplier bankruptcies in the U.S. aftermarket’s history. Some business units have already been shuttered as the group seeks to sell brands to satisfy creditors.

How did a parts empire built on decades‑old brands unravel so quickly? The answer lies in strategy and timing. First Brands pursued an aggressive, highly leveraged “buy‑and‑roll” model: borrow heavily to buy established niche brands, use acquired scale to finance the next deal, repeat. That model worked in a low‑rate, stable‑demand era. But it depended on cheap external credit and predictable replacement demand. It has been reported that interest‑bearing debt exceeded $5.5 billion and that off‑balance sheet supply‑chain financing and receivables factoring added more than $3 billion of obligations; when those capital taps closed, the structure rapidly lost support.

Structural shocks: tariffs, EVs and competition

External shocks accelerated the failure. Reportedly, U.S. tariffs implemented in April 2025 raised the company’s costs by roughly $99 million. Major lenders then declined to extend new funding, and the company’s U.S. bank accounts were frozen by set‑offs, leaving only about $15 million in cash before the filing. At the same time, longer‑term secular trends are eroding demand for core product lines: filters, spark plugs and friction parts are closely tied to internal‑combustion vehicles. As electric‑vehicle penetration rises — already outpacing much of the West in China and accelerating globally — those consumables face permanent demand erosion. Add online channels and retailer private‑label pressure, and traditional brand premiums shrink.

First Brands’ collapse is a cautionary tale for investors in “steady” sectors: scale and brand recognition do not immunize firms from shifts in financing conditions, trade policy and product obsolescence. For legacy brands with deep dealer channels and loyal customers, hope remains that buyers will emerge in the Chapter 11 process; but for creditors, employees and independent repair shops that rely on those parts, the restructuring will be messy and consequential.