Jefferies Financial provides update on Point Bonita Capital and First Brands

In response to inquiries, Jefferies Financial (JEF) Group, announced: On September 29, First Brands Group, and certain of its affiliates filed voluntary petitions for Chapter 11 bankruptcy protection. First Brands is an aftermarket auto parts manufacturer that sells its products to major auto-parts retailers. Point Bonita Capital, a division of Leucadia Asset Management, or LAM, manages on behalf of third-party institutional and other investors an approximately $3B portfolio of trade-finance assets, which 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 and arising from the sale of First Brands’ products to Obligors. The purchase of receivables in this fashion is called factoring, and the Point Bonita portfolio has approximately $715M invested in receivables that are almost entirely due from Walmart, Autozone, NAPA, O’Reilly Auto Parts, and Advanced Auto Parts, with First Brands, as the servicer, responsible for directing the Obligors’ payments to Point Bonita. For almost six years until September 15, Point Bonita always had been paid by the Obligors on time and in full. On September 15 First Brands stopped directing timely transfers of funds from the Obligors on Point Bonita’s behalf. 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. We have not yet received any information regarding 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.