UBS Faces $660M Exposure in First Brands Group Bankruptcy

UBS's significant exposure to First Brands' bankruptcy raises questions about the risks of complex financing arrangements. The deal to sell UBS's O'Connor unit may reshape its hedge fund business.

, and Administrator

2025 October 23 . 8:03 AM

1 min read

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UBS Faces $660M Exposure in First Brands Group Bankruptcy

Swiss banking behemoth UBS has substantial exposure to the bankruptcy of auto-parts supplier First Brands Group. The company, which sought Chapter 11 protection in Texas, has left UBS with significant unsecured claims and involvement in intricate financing arrangements.

UBS Hedge Fund Solutions is the largest unsecured creditor, with a claim of $233.7 million for providing supply chain financing. Meanwhile, UBS O'Connor, a hedge fund business owned by UBS, has a $116.1 million claim against First Brands Group. Together, these units make UBS the most exposed to the bankruptcy, with over $349.8 million in unsecured claims.

UBS Asset Management is also involved, having secured claims for more than $160 million, including holdings tied to term loans and a sidecar facility. Additionally, UBS Group AG has over $500 million in exposure to First Brands through various investment strategies, including a $1.1 billion bankruptcy loan provided with other groups to keep the company running during the court process.

The bankruptcy court has appointed a board committee to investigate First Brands' use of off-balance-sheet financing, a practice that has raised creditor concern and contributed to the company's financial struggles. First Brands filed for bankruptcy after failing to refinance $6 billion of loans.

The bankruptcy of First Brands Group affects not only UBS but also many private credit and working capital providers across the industry, according to a UBS spokesman. UBS's significant exposure to the bankruptcy highlights the complex nature of the company's financing arrangements and the potential risks involved in such investments. Cantor Fitzgerald has agreed to buy UBS's O'Connor unit, with the transaction expected to close in the fourth quarter, potentially reshaping UBS's involvement in the hedge fund business.