I just heard Fram/First Brands filed Chapter 11 last September. IDK if its already been posted, or not. I use Wix, anyway, but thought I'd post it here. Apparently Fram manufactured a lot of filters for other companies....

 

Fram got a lot of flak for their orange filters, but their Ultra and Racing filters were pretty top notch. That is, before they started cheapening those lines a couple of years ago.

 

First Brands turned out to be a giant scam run by acoupla thieves who did basically the same thing Trump was convicted for in NY (misc bogusly high property valuations used to obtain loans vs bogusly low valuations for taxes, although in FB's case it was A/R in which he also put up the same assets as collateral multiple times, whereas Trump's was real estate), to all of the companies they acquired. They had bought up A SHIPLOAD of parts mfrs, all of whom are now "bankrupt", since they essentially took all the money from all the loans and disappeared it; since the loans were against each brand's A/R, the brands are technically responsible for it, not FB itself. As far as whether the "brands" are still operating, are temporarily idle, can be revived, are permanently dead, ... , it's still up in the air. Some of the other brands affected are Motorcraft, Autolite, Carter, Raybestos, Centric, StopTech, Cardone, and Trico that I can recall. I think at least some of them are effectively killed because they are saddled with so much fraudulent debt that any buyer would have to pay off far more than the brands themselves are worth. It'll make lots of good MBA case studies in the coming years, much like Enron did.

 

Centric, StopTech and Trico hurt. I like those brands.

 

I hope they spend a very long time in jail, they impacted a lot of employees' families.

 

Same thing was done to Joann fabric stores and Red Lobster.

 

Same here. Anybody that steals from others should face punishment. Too bad some figure out ways to weasel out of it.

https://en.wikipedia.org/wiki/Trump_University
https://en.wikipedia.org/wiki/Trump_...inment_Resorts

Unfortunately that one escaped mostly unscathed.

https://en.wikipedia.org/wiki/First_Brands_Group

Red Lobster is an interesting case... that one wasn't "fraud" exactly, just total incompetence and greed. What happened to them was, an Asian shrimp broker (Thai I think he was) became a major investor in RL's parent company, and forced RL to buy all its shrimp from his company, at inflated prices. He then forced RL to offer that "unlimited shrimp" deal that you may recall from a few years ago, to artificially drive demand for his shrimp. Meanwhile RL was losing yyyyyuuuuuuuuujjjjjjjjjjje $$$ on every single customer that ordered any kind of shrimp at all, butt most especially the "unlimited" promotion, which drove RL to bankruptcy, and of course cut off his own shrimp sales and bankrupted himself in on the deal, if memory serves.

[makes pistol motion shooting into front of underwear] dammit I missed, all I got was the little one hanging down on the right [makes another shooting motion] dammit missed again, all I got this time was the little one on the left [makes another shooting motion] awwright, finally got that big long thing in the middle

Just bald-faced stupidity. Not even good enough material for MBA case studies.

 

Sounds like karma.

 

Red Lobster has new leadership, hope they turn a corner.

With respect to First Brands, leadership there played games, for example with recievables. They would tell bank 1 that they were pledging them, and then go to bank 2 and put up the same recievables. Its a given that financial leadership within the company were in on it. I wouldn't be suprised if their outside auditors get pulled into this process too. The company also have a chequered history with slow paying and tying up deals in court.

 

A/R = Accounts Receivable

You're right. FB was a "holding company", that basically was just 2 guys in an office, who by whatever means, managed to buy all those parts mfrs. Their auditors would have had to be on the take too. One of their frauds (I'm pretty sure, not the only one) was to use the various brands' A/R (an asset on their books, NOT FB's: basically, debts owed to them, by customers like parts store chains and automakers who bought their product, and hadn't paid for it yet) as collateral for loans which gave cash to FB and not the brands themselves, then turn around and encumber the same asset as collateral for more loans. The management of the individual brands might not even have known that these loans existed until creditors came calling. The loans in question were part of a financial practice called factoring, that allows companies to borrow money to cover the "float" between manufacturing their products, and collecting payment for them. It's particularly common in the clothing industry and other seasonal markets, where for instance people make stuff and accumulate inventory all year, while their sales are all in the Christmas season; butt is also used widely elsewhere. On a smaller scale, even people who work out of their homes sometimes use it. For example I knew a guy years ago that did body work out of his garage; he had been doing it for some years, therefore had somewhat of a track record; and that enabled him to go to a bank, borrow money to buy a wrecked car, receive a "draw" against the value of the repaired car periodically, then the entire loan balance he had accrued against that car, came due when he sold it after finishing it, or after a specified length of time whether the car was sold or not (MAJOR incentive on him to get busy and work on it). Obviously in a system like that, the underlying asset, whether inventory or A/R, can be collected or sold to cover a loan that goes into default, only once; the 2nd lender, or more, pledged the same collateral gets skinned. Other ways of gaming that kind of system involve inflating the value of A/R by things like "channel stuffing" (writing large sales orders, borrowing against the A/R, then cancelling the orders, rendering them no longer receivable), and writing sales orders at a highly inflated value and borrowing against that, then giving buyers a "discount" to the correct price, thus restoring the book value of the asset to its real, lower, collectible value. Again, classic MBA case study stuff. FB's owners took the loan money and ran, defaulting on the loans and leaving the individual companies they controlled with debts that by the time they got caught had become so large that there's no way for those to ever pay them back. Pretty sure they've been indicted on federal fraud charges, and maybe are in jail already awaiting trial, I don't know.

 

Good examples there about factoring and pipeline stuffing.

I'm curious to see if any of the brands get purchased.

 

I heard ANCO was also included. Like most things in life, s few rotten SOBs ruin it for the other 99%. Like my dad once told me long ago; I never got a virgin, just the box they came in.....