09.10.2025

UBS funds and the insolvency of First Brands: A new Greensill debacle for investors?

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Background

The insolvency of First Brands Group, LLC ("First Brands") is once again shaking up the supply chain finance market and directly and indirectly affecting several UBS investment funds. Particularly affected are the UBS Working Capital Finance Opportunistic Fund, UBS Hedge Fund Solutions, and various UBS Asset Management funds, which have invested a total of more than $500 million in First Brands. The value of the affected funds is estimated to have fallen by 10 to 20 percent, resulting in enormous losses for investors.

What has happened at First Brands?

First Brands, a global manufacturer and supplier of automotive replacement parts with approximately 26,000 employees and reported revenues of approximately US$5 billion in 2024, filed for Chapter 11 bankruptcy on September 28, 2025, due to liabilities of more than US$10 billion. 

One of First Brands' main creditors is the UBS Group through various funds and investment structures. Particularly affected is 

- the UBS Working Capital Finance Opportunistic Fund (Ireland), which has invested around 9% of its fund volume directly and additionally 21% indirectly in First Brands, including supply chain financing and bonds

- UBS Hedge Fund Solutions, which holds approximately $230 million from supply chain financing with First Brands – the largest unsecured claim in the insolvency proceedings,

- the hedge fund O'Connor, which UBS sold to Cantor Fitzgerald and which has invested approximately US$110 million in unsecured bonds from First Brands, and

- funds from UBS Asset Management, which according to reports have invested over $160 million in secured claims against First Brands.

Parallel to the Greensill insolvency: systemic risks of supply chain financing

The current events surrounding First Brands are clearly reminiscent of the Greensill debacle. In both cases, Greensill and First Brands, supply chain financing played a central role, often involving complex off-balance-sheet structures. Investment risks are often insufficiently disclosed in such cases. The structures serve to seemingly outsource credit risks, but they make it difficult for investors to gain an overview of the actual risks. Additional risks often arise from a concentration of investments in large individual exposures. 

Similar to the Greensill case, the First Brands insolvency threatens legal disputes against the banks, investment advisors/brokers, and fund service providers involved, as well as possible criminal investigations against responsible employees and managers. 

Consequences for investors in affected UBS funds

Investors in UBS funds face significant risks of loss as a result of the First Brands insolvency. The value of the affected funds is likely to have fallen by 10 to 20 percent, affecting several hundred million US dollars of investor funds. The affected UBS funds continue to be managed as "active" and are not in liquidation. At the same time, however, they face enormous valuation discounts and high default risks.

Similar to the Greensill case, aggrieved investors may be entitled to claims against advisors, brokers, managers, banks, or fund service providers. In particular, claims for damages arising from breaches of duty in investment advice or brokerage due to missing or incorrect risk disclosure, lack of transparency, or conflicts of interest may be considered. 

Our expertise

Anyone affected by losses in value should seek legal clarification as to whether claims can be asserted. As experienced lawyers in the field of banking litigation, we offer you competent support in examining and enforcing your claims, drawing on our experience in successfully representing various investors in court proceedings for damages in the triple-digit million range in connection with the Greensill insolvencyOur close cooperation with LALIVE has proven to be extremely advantageous in this regard, enabling us to obtain information from the criminal files of the investigations initiated in Switzerland against various employees of the investment advisors and fund service providers involved.

If you have any questions regarding the assertion of possible claims for loss of value of investments in connection with the First Brands insolvency, please do not hesitate to contact our authors.

Author
Dr Stephan Bausch, D.U.

Dr Stephan Bausch, D.U.
Partner
Cologne
stephan.bausch@luther-lawfirm.com
+49 221 9937 25782

Dr Borbála Dux-Wenzel, LL.M.

Dr Borbála Dux-Wenzel, LL.M.
Partner
Cologne
Borbala.Dux-Wenzel@luther-lawfirm.com
+49 221 9937 25100

Dr Marco Jerczynski

Dr Marco Jerczynski
Counsel
Essen
marco.jerczynski@luther-lawfirm.com
+49 201 9220 0

Stephanie Quaß

Stephanie Quaß
Counsel
Frankfurt a.M.
stephanie.quass@luther-lawfirm.com
+49 69 27229 25782