Western Alliance stock slides after report on risks from First Brands

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Western Alliance Bancorporation (NYSE:WAL [https://seekingalpha.com/symbol/WAL]) stock dropped 3.4% in Wednesday afternoon trading after a media report described the company's exposure to debt related to First Brands, an auto-parts maker that filed for bankruptcy in September.

The bank faces the exposure through a leveraged facility with a fund associated with Jefferies Financial Group [https://seekingalpha.com/news/4502610-jefferies-tallies-161m-of-exposure-to-bankrupt-auto-parts-maker-first-brands] (JEF [https://seekingalpha.com/symbol/JEF]), Bloomberg News reported. Point Bonita Capital, a division of Jefferies' Leucadia Asset Management that manages trade-finance assets on behalf of third-party institutional and other investors, has some $715M invested in receivables owed to First Brands, predominantly from Walmart (WMT [https://seekingalpha.com/symbol/WMT]), AutoZone (AZO [https://seekingalpha.com/symbol/AZO]), NAPA, O'Reilly Automotive (ORLY [https://seekingalpha.com/symbol/ORLY]), and Advance Auto Parts (AAP [https://seekingalpha.com/symbol/AAP]).

Part of the fund is collateral for a leveraged facility with Western Alliance (NYSE:WAL [https://seekingalpha.com/symbol/WAL]), which means that WAL would bear the losses if those assets soured.

Currently, invoices are being separated in the First Brands bankruptcy estate, Bloomberg said. [https://www.bloomberg.com/news/articles/2025-10-08/western-alliance-faces-first-brands-risk-through-jefferies-fund?srnd=homepage-americas] The company's special advisers are looking into whether receivables may have been pledged as collateral more than once, the article said.

"Western Alliance Bank has multiple secured lending facilities with Leucadia Asset Management (“LAM”) secured by Accounts Receivables purchased by LAM from a diverse group of underlying account debtors (not solely First Brands)," the company said in an emailed statement to Seeking Alpha. "Presently, we have no reason to believe the events from the First Brands bankruptcy create a material risk of loss in connection with the credit at this time. LAM is independently pursuing their own rights and remedies under their governing credit documents separately and apart from their obligations to Western Alliance."

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