Receivables tied to First Brands under scrutiny
Jefferies Financial Group is confronting potential losses of $44.6 million following the collapse of auto parts supplier First Brands Group Inc., according to a disclosure made Wednesday. The bank revealed that Point Bonita Capital — an asset manager under its Leucadia Asset Management division — had allocated nearly 25% of its $3 billion trade finance portfolio to receivables linked to First Brands.
Approximately $715 million of Point Bonita’s investments were in receivables owed by First Brands’ clients, including Walmart and AutoZone. First Brands, now bankrupt, was responsible for forwarding payments from these retailers to Point Bonita, but stopped doing so as of September 15, triggering the crisis. Jefferies clarified that most of its own exposure stems from this trade finance portfolio.
Additional exposure through Apex Credit Partners
Beyond Point Bonita, Jefferies has indirect exposure via its 50% stake in Apex Credit Partners, which holds roughly $48 million in First Brands loans through collateralized loan obligations (CLOs). While analysts at Morgan Stanley flagged the potential loss at $44.6 million, they categorized it as manageable in terms of Jefferies’ tangible shareholders’ equity.
Leucadia Asset Management itself has a $113 million equity position in the Point Bonita fund, deepening Jefferies’ overall exposure. The bank had also been marketing a refinancing package for First Brands before its bankruptcy filing, further entangling it in the unfolding situation.
Wider implications and trade finance concerns
First Brands, best known for manufacturing wiper blades and oil filters, filed for bankruptcy after plans for a debt refinancing fell apart amid increased investor scrutiny. New court documents show that funds managed under UBS Group AG also face over $500 million in exposure to the failed company.
This episode adds to a series of recent blows in the opaque trade finance sector, which has seen numerous high-profile collapses. The most notorious case was Greensill Capital in 2021, whose failure cost banks and insurers billions and contributed to the downfall of Credit Suisse. Jefferies noted that First Brands’ court filings mention ongoing investigations into whether receivables had been sold to third-party factors more than once or otherwise misused.
As regulators and investors grow wary of the hidden risks in trade finance, Jefferies’ entanglement with First Brands raises renewed concerns about transparency, risk management, and overexposure in a sector still shaken by past frauds.
