First Brands Shows Working Capital Needs Sunlight: Chris Bryant

When aftermarket auto parts supplier First Brands Group filed for bankruptcy on Sunday, detailing several billion dollars of financing related to invoices and inventory, my immediate reaction was: not again.

Its short-term funding arrangements provided the acquisitive company with liquidity without adding as much debt to its balance sheet, but their size and opacity ended up hastening its demise, leaving creditors exposed to billions of dollar in losses. I’ve long been worried by the suboptimal financial disclosure of this kind of invoice-based lending. But First Brands’ bankruptcy might indicate that some corporate capital structures are even more financialized than creditors ...