(Bloomberg) — Funds beneath the UBS Group AG umbrella face greater than half a billion {dollars} of publicity to bankrupt auto-parts provider First Manufacturers Group via varied funding methods, with one rating as the largest unsecured creditor, courtroom paperwork present.
The auto-parts provider filed for Chapter 11 safety in Texas late Sunday following a failed try to refinance $6 billion of loans and creditor concern over the corporate’s use of opaque off-balance-sheet financing. The board committee appointed as a part of the chapter is investigating First Manufacturers’ use of that off-balance sheet funding.
UBS Hedge Fund Options is the most important unsecured creditor with a $233.7 million declare for offering provide chain financing, whereas O’Connor — a hedge fund enterprise that UBS not too long ago agreed to promote to Cantor Fitzgerald — has an analogous declare for $116.1 million.
In the meantime, UBS Asset Administration has secured claims for greater than $160 million together with holdings tied to time period loans and a sidecar facility put in place in June to boost funds from personal credit score suppliers.
That agency can also be a part of a bunch of secured lenders offering First Manufacturers with contemporary capital within the type of a $1.1 billion chapter mortgage to assist hold it working through the courtroom course of.
“This occasion impacts many personal credit score and dealing capital suppliers throughout the trade,” a spokesman for UBS instructed Bloomberg. “On this extremely fluid state of affairs, we’re working to find out the potential efficiency affect on the small variety of our affected funds, and are centered on defending the pursuits of our shoppers.”
Earlier this 12 months, Cantor agreed to purchase UBS’s O’Connor unit, which has about $11 billion in property beneath administration and 6 funding methods. The transaction is predicted to shut within the fourth quarter. This is able to finish greater than three many years of possession by the Swiss financial institution and place the hedge fund again in charge of one among its early founders.
–With help from Jonathan Randles, Myriam Balezou and Olivia Fishlow.
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