Billions in assets may be missing from bankrupt auto parts maker First Brands due to repeated use of collateral, sparking investigations and major losses for banks like UBS.

Creditors of bankrupt auto parts supplier First Brands say billions of dollars may have disappeared due to widespread rehypothecation, where collateral was reused multiple times as loan security. The company, which filed for bankruptcy with $10B–$50B in liabilities and $1B–$10B in assets, had $5.8B in leveraged loan debt and extensive off-balance-sheet financing. Investigations are probing whether receivables and inventory were pledged repeatedly, creating overlapping claims. Major firms like UBS O'Connor and Millennium Management suffered significant losses, with UBS reporting over $500M in exposure. The collapse underscores systemic risks in complex credit structures.