Whiplash: The Numbers Looked Strong—Right Up Until the Story Collapsed.
Fram. Autolite. TRICO. Raybestos. ANCO. Another 25+ iconic automotive brands.
First Brands wasn’t a dying company in a dying industry. It was presenting the financial picture of a successful, highly profitable company – That is what they were telling suppliers anyway.
How do I know? First-hand experience. We were there. THEY told us.
On a video call, working with a Crescendo client to navigate the risk of continuing to sell to a company that, publicly, still seemed “strong” but……
But were they?
First Brands was adamant they were. Maybe a little too adamant. They told us they were in conversations with the Big Three trade credit insurers—Atradius, Coface and Allianz Trade. At that time, those insurers had significant exposure, and were starting to see past dues reported, and at least 1 had a claim filed against a First Brands entity.
The carriers wanted answers. They wanted financial information. They wanted the past dues explained and cleared up.
First Brands insisted they were “in the process of being transparent” with the carriers and would confirm they were strong.
What the carriers got were delays and broken promises, essentially confirming by non-confirming that First Brands was in trouble.
What Crescendo policyholders and other insured supplier got was an early-warning-heads-up. The Non-Trade Credit Insured suppliers…. Over 25,000 of them….they were still hearing the message: “Don’t worry about us, We’re strong”.
We all now know the proof of strength never materialized. Because it didn’t exist. They were insolvent, no matter how much they insisted otherwise. Some 70 or so trade credit insured suppliers got the heads up.
The Timeline.
Heads Up Cancellation by Allianz Trade in May.
June 24 Video Call referenced above, moved them to Cash in Advance same day under the condition First Brands would work with Allianz to prove their strength.
July. August. No proof of strength. Wall Street lenders were beginning to ask the same question Crescendo and the trade credit insurers had already been asking: If First Brands was really as strong as it claimed, why was getting reliable financial information so difficult? Why not clear up the past due balances?
The answer is simple. They were not strong. They were bankrupt.
Chapter 11 Bankruptcy September 28, 2025. Converted to Chapter 7 liquidation September 1, 2026.
The heads up moved our clients from making a credit decision to making a business decision (the Credit decision was made, they were not credit worthy). The options were: A.) Keep the Revenue and Continue selling on terms, retaining the risk B.) Keep the Revenue and Move to CIA if First Brands would accept those terms, or C.) Stop Selling to them.
Our clients selling to First Brands all moved them to CIA. (It was telling that First Brands accepted those terms). Meanwhile, during June, July, and August, the other 25,000+ suppliers/unsecured creditors were still hearing the “We’re Strong” message, and continued shipping on terms. They essentially threw money out the window.
The Crescendo Take
One of the lessons from First Brands is that a customer in distress can be absolutely adamant that everything is fine.
That doesn’t mean they’re right. It also doesn’t even mean they’re lying.
The person across the table from you (or on the video screen) may genuinely believe what they’re telling you. They may not know the full story themselves.
That’s what makes managing credit risk difficult. Monitoring whether a customer paid you last month is important.
But don’t confuse that with knowing whether they’ll be able to pay you next month.