Federal Judge Rules Bankrupt First Brands Must Allow Last-Minute Bidder for Brands

U.S. Bankruptcy Court for the District of Delaware. The company, which produces aftermarket parts under brands such as Raybestos, Ultima and PerTronix, has been undergoing a court-supervised sale process to address its financial distress.

The bankruptcy filing occurred amid challenges in the automotive supply chain. A last-minute bidder emerged seeking to acquire certain assets, including some of First Brands' brands. The bidder requested access to confidential information to prepare a competing offer.

First Brands initially opposed the request, citing the advanced stage of the sale process.

Bankruptcy Judge Laurie Selber Silverstein ruled in favor of the bidder on October 10, 2024. The judge ordered First Brands to provide the bidder with access to due diligence materials and other relevant information by October 14, 2024.

This ruling ensures the bidder can submit a formal offer before the auction concludes. The decision highlights the court's role in promoting competitive bidding during bankruptcy sales to maximize value for creditors. First Brands' primary stalking horse bidder, which had agreed to purchase substantially all assets for approximately $400 million, may face competition as a result.

The auction is scheduled for later in October 2024.

Group operates manufacturing facilities in the United States and internationally, supplying parts to automotive repair markets.

The company's bankruptcy stems from accumulated debt exceeding $500 million, according to court filings. Creditors, including secured lenders and trade vendors, stand to be affected by the outcome of the sale. Employees at First Brands' plants in states such as Michigan and Ohio could see impacts depending on the buyer's plans for operations.

The successful bidder will assume certain liabilities, while others may be discharged in the bankruptcy. Regulatory approvals may be required for the transaction to close, potentially by the end of 2024. The ruling underscores ongoing efforts in the auto-parts sector to restructure amid economic pressures.

Future proceedings will determine the final sale terms and distribution to claimants. No further details on the last-minute bidder's identity have been disclosed.