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Blue Owl's Private-Credit Reckoning; First Brands’ Two-Month Race to Sell
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Welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Monday, March 2. In today's briefing, Blue Owl Capital has surged in the ranks of private-credit powerhouses, but cracks are now starting to show amid wider shocks to the asset class—raising doubts about the future of the once red-hot industry. And auto-parts supplier First Brands is scrambling to sell four business units in bankruptcy within roughly two months to avoid a liquidation starting April 30.
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Doug Ostrover and Marc Lipschultz Ryan Olbrysh for WSJ; Kevin Hagen for WSJ (2), Kyle Grillot/Bloomberg News, Shelby Tauber/REUTERS, Chris O’Meara/AP
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They Built the Hottest Firm on Wall Street. Now They Have to Save It.
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Doug Ostrover and Marc Lipschultz seemed to have private credit figured out.
The executives joined forces to launch fund manager Blue Owl Capital, turning it into a powerhouse in the booming business of lending to private companies without the use of banks. They pounced on trends early, zeroing in on lending to software companies, plowing money into artificial-intelligence and selling their funds to wealthy individuals.
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Ostrover and Lipschultz became instant billionaires, buying a hockey team, a piece of a football team and luxury real estate.
Now, the foundations of the empire are cracking, raising growing questions about the once-sizzling industry’s future and transfixing Wall Street in a mix of schadenfreude and anxiety.
Spooked by a series of shocks in the wider credit market, individual investors who put cash into some Blue Owl funds have been asking for their money back. The firm recently said it was unloading loans to raise cash for investor payouts.
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In January First Brands shut down facilities in its Autolite unit, among other closures. Photo: Nick Oxford/Bloomberg News
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First Brands Races to Sell Units in Bankruptcy to Avert April Wind-Down
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First Brands is racing to sell its brands in bankruptcy to avoid liquidating within roughly two months, according to people familiar with the matter.
The auto-parts supplier is lining up buyers for four business units ranging from towing to fuel pump makers, the company said at a hearing Friday. If those sales don’t go through, First Brands will start to wind down its operations on April 30, the people said.
Ford, First Brands’ largest original equipment manufacturer customer, made a proposal that serves as the basis for buyer negotiations for three of the brands, including towing and trailer business Horizon Global, auto interior and fluid management system maker TMD, as well as fuel and water pumps business Pumps.
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Inside the Software Sector’s $1.6 Trillion Meltdown
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Once a bankable, buoyant sector, software is turning off investors spooked by an AI-powered future. WSJ markets reporter Jack Pitcher explains how we got here. Plus, personal tech columnist Nicole Nguyen is here with tips to avoid those dreaded “storage full” alerts. Katie Deighton hosts.
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Bank Stocks Suffer Another Plunge on Credit and AI Fears
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A chorus of concerns about AI and risky lending has bank investors spooked. Shares in big lenders and investment banks sold off sharply Friday after new credit issues emerged and fears of broader economic implications from artificial intelligence weighed on investors.
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Cadwalader lands liability management vet. Cadwalader Wickersham & Taft landed a restructuring partner from Glenn Agre to enhance the firm's capabilities in liability management and chapter 11.
Shai Schmidt joins Cadwalader's New York office with experience representing minority creditors in some of the largest liability management exercises in recent years, including Better Health Group, Tropicana and Oregon Tool. He will join Cadwalader in addition to London-based Jakeob Brown, who is joining from Akin.
“I’m excited to join Cadwalader,” Schmidt said. "I’ve long been impressed with the firm’s reputation for client service and innovation, and I believe my restructuring practice and the clients I represent in LMEs and in‐court bankruptcies will benefit tremendously from Cadwalader’s world‐class restructuring, debt‐ finance and other capabilities.”
The co-chair of Cadwalader's restructuring practice, Doug Mintz, said Schmidt's addition will leverage his experience with collateralized loan obligation managers at a time when they are increasingly leading lender groups.
—Andrew Scurria
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Raves, Debt and Deaths: How a Wall Streeter Came to Own New York’s Biggest Club
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Andrew Axelrod realized that the $40 million he had backing the Brooklyn Mirage was going south when the club’s founder disappeared without a trace.
Axelrod, a 42-year-old fund manager who cut his teeth in Wall Street’s distressed-debt markets,
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believes live events are a cash cow of our times. He isn’t alone. Private-equity firms and hedge funds alike have thrown billions of dollars at the live-events industry, believing it offers a visceral, in-person antidote to society’s obsession with computer screens and iPhones.
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Olivier Bron, left, chief executive of Bloomingdale’s, and Tony Spring, chief executive of its parent, Macy’s Inc., at Bloomingdale’s New York flagship
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Bloomingdale’s Is Defying the Demise of Department Stores
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Bloomingdale’s doesn’t seem like a retailer that should be succeeding right now.
Most of its 32 department stores are in malls, a way of retail left for dead by many. Dozens of its rivals declined for decades and filed for bankruptcy or went out of business. A coveted group of customers—trendy women in their 20s and 30s—are native online shoppers.
Yet the department-store chain has posted five straight quarters of sales gains, including a 9% rise in its most recent quarter ended Nov. 1. It’s scheduled to report its next set of results in March and analysts expect the streak to continue—not least because a chief rival, Saks Global, which includes Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman, filed for bankruptcy in January.
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