Jefferies tallies $161M of exposure to bankrupt auto-parts maker First Brands (updated)

[Jefferies Group headquarters in New York City, USA.]
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_At 1:44 PM ET, updates to include comment and calculations from Morgan Stanley analyst on Jefferies' maximum loss potential in first, second, and seventh paragraphs._

Jefferies Financial Group (NYSE:JEF [https://seekingalpha.com/symbol/JEF]) stock slid 3.7% in Wednesday premarket trading after the firm disclosed details of its exposure [https://seekingalpha.com/filings/pdf/18830649]to First Brands, an auto parts maker that filed for bankruptcy on Sept. 29, 2025. The filing indicates that it has ~$161M of exposure to the company. However, one Wall Street bank figures Jefferies' maximum loss from the bankruptcy is much smaller.

The bank is likely to provide clarity on any impairment charges in Q3, Morgan Stanley analyst Ryan Kenny said in a note to clients. He calculated Jefferies' (NYSE:JEF [https://seekingalpha.com/symbol/JEF]) maximum potential loss at $44.6M.

Point Bonita Capital, a division of Jefferies' Leucadia Asset Management, manages on behalf of third-party institutional and other investors an ~$3B portfolio of trade-finance assets. That portfolio is supported by total invested equity of $1.9B, of which $113M, or 5.9% is owned by LAM.

Since 2019, the portfolio has included accounts receivables purchased from First Brands. The Point Bonita portfolio has ~$715M invested in receivables that are almost entirely due from Walmart (WMT [https://seekingalpha.com/symbol/WMT]), Autozone (AZO [https://seekingalpha.com/symbol/AZO]), NAPA, O'Reilly Auto Parts (ORLY [https://seekingalpha.com/symbol/ORLY]), and Advanced Auto Parts (AAP [https://seekingalpha.com/symbol/AAP]). First Brands, as servicer, is required to make the retailers' payments to Point Bonita.

Also, Apex Credit Partners, a wholly owned subsidiary of Jefferies Finance LLC, which is 50% owned by Jefferies, manages on behalf of third-party institutional and other investors some collateralized loan obligations that invest in broadly syndicated loans. Twelve CLOs and one CLO warehouse managed by Apex own $48M in the aggregate of First Brands' term loans, which is ~1% of the CLO assets managed by Apex.

For almost six years until Sept. 15, 2025, the payments on the receivables managed by Point Bonita have been made in full and on time. But First Brands stopped transferring funds to Point Bonita on Sept. 15, 2025.

Morgan Stanley's calculation includes Point Bonita's 5.9% share in the $715M receivables portfolio, or $42.2M, and the 9.9% equity in $48M of CLOs tied to Apex Credit Partners, in which Jefferies holds a 50% ownership, or $2.4M. Those two pieces amount to $44.6M.

"In its bankruptcy filings, First Brands indicated that its special advisors were investigating whether receivables had been turned over to third-party factors upon receipt and whether receivables may have been factored more than once," Jefferies said in a filing on Wednesday.

The company hasn't received any information on the results of that investigation.

"We are in communication with First Brands’ advisors and are working diligently to determine what the impact on Point Bonita might be. We intend to exert every effort to protect the interests and enforce the rights of Point Bonita and its investors," Jefferies said.

Separately, First Brands bankruptcy filings showed that Swiss bank UBS (UBS [https://seekingalpha.com/symbol/UBS]) has more than $500M of exposure to the bankrupt company's debt and invoice-linked financing, the_ Financial Times_ reported [https://www.ft.com/content/39da5f5a-e7e6-4678-9c82-60e5a5e023e8]on Tuesday.

In addition, SA Investing Group Leader Trapping Value [https://seekingalpha.com/author/trapping-value] explained why the First Brands bankruptcy set off some selling in CLO closed-end funds [https://seekingalpha.com/article/4828327-first-brands-bankruptcy-sends-shivers-through-clos-and-bdcs] and business development companies.

MORE ON JEFFERIES FINANCIAL GROUP

* Jefferies: Positioned For A Cyclical Recovery [https://seekingalpha.com/article/4822743-jefferies-positioned-for-a-cyclical-recovery]
* Jefferies Financial Group tops Q3 estimates [https://seekingalpha.com/news/4500058-jefferies-financial-group-tops-q3-estimates]
* Jefferies Financial Group FQ3 2025 Earnings Preview [https://seekingalpha.com/news/4499523-jefferies-financial-group-fq3-2025-earnings-preview]
* Seeking Alpha’s Quant Rating on Jefferies Financial Group [https://seekingalpha.com/symbol/JEF/ratings/quant-ratings]
* Historical earnings data for Jefferies Financial Group [https://seekingalpha.com/symbol/JEF/earnings]