The collapse of first brands has sent shockwaves through the automotive aftermarket and financial world, leaving creditors reeling and investors on edge. In late September, the company filed for Chapter 11 bankruptcy protection, disclosing staggering liabilities and sparking concern over the ripple effects across global credit markets. Among those hardest hit is Millennium, which is now facing losses of around $100 million as a direct result of its exposure.
This dramatic failure highlights how fragile heavily leveraged corporate structures can be, especially when combined with complex supply chain financing and aggressive debt arrangements. For Millennium and others in the credit space, the sudden downfall of first brands is a costly reminder of how quickly risk can become reality.
The Bankruptcy Filing
First brands officially entered bankruptcy court at the end of September, listing liabilities estimated between $10 billion and $50 billion, with assets of just $1 billion to $10 billion. To continue day-to-day operations during restructuring, the company secured $1.1 billion in debtor-in-possession financing from first-lien lenders. This emergency financing is designed to stabilize its U.S. operations while legal and financial restructuring takes place.
The filing also revealed that affiliated entities tied to first brands sought protection at the same time, with many of their debts guaranteed by the parent company. These parallel filings only deepened creditor unease and underscored the scale of the financial strain within the group.
Millennium’s $100 Million Blow
Millennium, one of the financial institutions with significant exposure, is reported to be facing losses of about $100 million. Its investments were linked to facilities that provided cash advances against supplier invoices and receivables connected to first brands.
The collapse has left Millennium and other creditors scrambling to assess the recovery value of their positions. In restructuring cases of this size, creditors often negotiate for partial recoveries through a mix of debt conversion, equity in the reorganized company, or heavily discounted repayments. Whether Millennium will recoup even a fraction of its losses remains to be seen.
The Role of Supply Chain Finance
At the heart of the downfall lies a sprawling network of supply chain finance arrangements. First brands relied on short-term facilities that advanced cash against invoices and inventory. Over time, however, concerns grew that the same receivables were pledged to multiple lenders, creating layers of risk that unraveled once confidence faltered.
It is estimated that supply chain finance obligations linked to first brands exceeded $800 million. Once lenders began to question the integrity of these structures, access to liquidity evaporated, pushing the company closer to insolvency.
Why First Brands Collapsed
Several factors contributed to the collapse:
- Excessive Leverage – High levels of debt left little margin for error.
- Opaque Financing Structures – Off-balance-sheet arrangements and complex factoring practices created uncertainty.
- Erosion of Trust – Once lenders suspected double-pledging of assets, confidence deteriorated rapidly.
- Macroeconomic Pressures – Rising borrowing costs and a slower aftermarket environment further strained finances.
Ultimately, it was a classic case of a heavily indebted company unable to sustain itself once short-term financing closed off.
Impact on Credit Markets
The bankruptcy of first brands has raised red flags for the broader credit market. Investors and lenders are questioning the safety of similar structures in other industries. Analysts warn that the collapse could have a chilling effect on supply chain financing, a tool widely used across manufacturing, retail, and technology.
While the direct impact on automakers may be limited—given first brands’ role as an aftermarket supplier—the reputational damage to credit markets is significant. Creditors may demand tighter transparency standards and stricter oversight of invoice financing arrangements going forward.
Affiliated Entities in Trouble
In addition to first brands, affiliated groups such as Carnaby Capital Holdings filed their own bankruptcy petitions. These affiliates reported billions in combined liabilities, further complicating the restructuring. Because many of their debts were guaranteed by first brands, the parent company’s troubles spread quickly across the group.
This web of interconnected filings will likely slow the restructuring process and spark disputes among creditors over claims, priorities, and recoveries.
Numbers at a Glance
| Category | Estimate |
|---|---|
| Liabilities | $10–50 billion |
| Assets | $1–10 billion |
| DIP Financing | $1.1 billion |
| Supply Chain Finance Exposure | ~$866 million |
| Millennium’s Loss | ~$100 million |
What Comes Next
The path forward for first brands depends on how quickly restructuring negotiations can progress. Key developments to watch include:
- Court Approvals – The bankruptcy court must authorize the use of DIP financing and restructuring milestones.
- Creditor Negotiations – Lenders like Millennium will push for recoveries, potentially in the form of equity in a reorganized entity.
- Investigations – Scrutiny of invoice financing practices could lead to disputes or litigation.
- Market Sentiment – Other companies with similar financing structures may face higher borrowing costs.
Given the size of liabilities and the complexity of financing arrangements, the case could take months, if not years, to fully resolve.
Conclusion
The collapse of first brands is one of the most dramatic corporate failures of 2025, shaking confidence in supply chain finance and exposing lenders like Millennium to massive losses. With billions of dollars at stake and a long restructuring process ahead, the bankruptcy will remain a closely watched case in financial and automotive circles.
The story is still unfolding — what’s your take on the collapse of first brands and its broader impact? Share your thoughts in the comments and stay tuned for future updates.