By Dietrich Knauth
NEW YORK (Reuters) -Bankrupt auto parts supplier First Brands on Wednesday received a U.S. judge’s permission to proceed with the first phase of a $1.1 billion bankruptcy loan, giving the company an immediate infusion of $500 million as it tries to reorganize its longer-term debt.
U.S. Bankruptcy Judge Christopher Lopez approved the first phase of the loan at a court hearing in Houston, Texas, after First Brands said it needed the money to stabilize a business that been knocked off course by growing debt disputes and President Donald Trump’s tariffs.
“It is clear that this debtor needs financing, and an incredible amount of financing,” Lopez said.
Lopez will consider approving the remainder of the loan at a future court hearing.
First Brands filed for bankruptcy on Monday after its lenders began investigating irregularities in the company’s financial reporting. The company has $11.6 billion in total liabilities, according to court documents.
Financial troubles at the auto parts supplier, coupled with the recent bankruptcy of subprime auto lender Tricolor Holdings, have rattled debt investors and stoked fears of broader stress in corporate debt markets.
(Reporting by Dietrich Knauth; Editing by Chris Reese, Alexia Garamfalvi and Nick Zieminski)
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