UBS Group AG is liquidating two hedge funds at its Chicago-based O’Connor business after losses tied to the bankrupt auto-parts supplier First Brands Group, marking one of the first signs of strain for investors exposed to the company, according to a report by Bloomberg.
The funds, part of O’Connor’s Working Capital Finance Opportunistic strategies, faced redemption requests following direct exposure to First Brands. UBS confirmed that most of the funds’ assets are expected to be monetised by the end of 2025, with around 70% of net asset value projected to be recovered. A separate high-grade fund with no First Brands exposure is also being wound down.
First Brands filed for bankruptcy in September, revealing obligations exceeding $10bn across its network of factories and distribution centres, affecting several major financial institutions. UBS emerged as one of the largest creditors, holding claims through O’Connor and its broader asset management business.
UBS CEO Sergio Ermotti said the bank has no balance sheet exposure to First Brands and emphasised that the affected funds were targeted at sophisticated investors with clear risk disclosures.
The winding down comes as UBS finalises the sale of O’Connor to Cantor Fitzgerald. Court documents show O’Connor has an unsecured claim of $116.1m against First Brands, while UBS Hedge Fund Solutions holds a $233.7m claim through supply chain financing. UBS Asset Management has additional secured claims totalling over $160m, including term loans and sidecar facilities involving private credit providers.
The bank is also in discussions regarding Horizon Global, a First Brands business outside the US, to explore potential support options.
