(Reuters) – Investment bank Jefferies revealed on Wednesday that its Leucadia Asset Management fund held about $715 million in claims linked to bankrupt auto parts maker First Brands Group, whose rapid financial deterioration has worried bond investors for several weeks.
First Brands filed for bankruptcy protection at the end of September with liabilities of more than $10 billion.
According to Jefferies, First Brands stopped one-time transferring debtor payments to Point Bonita, a fund managed by Leucadia, on September 15.
Point Bonita Capital invests in trade finance assets by purchasing receivables from companies such as First Brands and collecting payments from large retailers on behalf of the fund.
“We are in contact with First Brands advisors and are working diligently to determine the impact on Point Bonita,” the investment bank said.
“We intend to make every effort to protect the interests and enforce the rights of Point Bonita and its investors.”
For its part, UBS said on Wednesday that it was examining the impact of the bankruptcy of First Brands on several of its investment funds while the Swiss bank is exposed to the tune of more than 500 million dollars to the bankrupt American automobile supplier.
“This event affects many private credit and working capital providers in the industry,” UBS said in a statement.
“In this very volatile environment, we are working to determine the potential impact on the performance of the small number of our affected funds and are focusing our efforts on protecting the interests of our clients.”
The auto parts supplier’s financial woes, along with the recent bankruptcy of subprime auto lender Tricolor Holdings, have recently rattled bond investors and fueled fears of more widespread stress in the credit market, according to bondholders and bankruptcy experts.
First Brands, which is not publicly traded and produces aftermarket parts such as filters, brakes and lighting systems for the automotive aftermarket, has become a major player in the industry through the acquisition of competing companies through the use of debt.
(Written by Manya Saini in Bangalore; Diana Mandia, edited by Blandine Hénault)
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