Welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Tuesday, March 10. In today's briefing, First Brands' top lenders, including Oaktree Capital Management, have shifted from a corporate rescue to a litigation strategy by discussing the funding of legal claims against former insiders to recover their losses following the auto-parts seller's collapse, sources said.

First Brands Group’s top creditors are discussing funding a web of legal claims against former insiders tied to the auto-parts seller’s sudden collapse, shifting their focus from rescuing the business to seeking value from litigation.

Lenders that hold a $1.1 billion loan to carry First Brands through chapter 11, including Oaktree Capital Management, are now discussing a strategy to bankroll lawsuits aimed at recovering at least some of their losses, according to people familiar with the matter.

The lawsuits are expected to go after former company executives as well as financiers that received payments from First Brands before its bankruptcy. The financing talks are in early stages, the people said.

• Earlier: First Brands is racing to sell its brands in bankruptcy to avoid liquidating within roughly two months, according to people familiar with the matter.

Jefferies Financial Group issued a response to Western Alliance Bank on Monday, dismissing a lawsuit concerning a loan tied to the collapse of First Brands as "false and misleading."

In a letter to stakeholders, Jefferies CEO Richard Handler and President Brian Friedman argued that Western Alliance’s loans were made to special-purpose vehicles with no credit support or guarantees from the bank and the fund associated with it. Jefferies claims Western Alliance requested a formal guarantee shortly before the bankruptcy filing, a request Jefferies denied.

Jefferies also addressed a separate GBP103 million exposure to Market Financial Solutions involving potentially "double-pledged" collateral, though it expects the net earnings impact to remain below $20 million. Jefferies said its financial position remains robust despite potential losses from both cases.

• Western Alliance is suing Jefferies Financial Group over a soured $126.4 million loan tied to bankrupt auto supplier First Brands Group.

There may be little that Blackstone or BlackRock can do to stop the runaway train of negativity about private credit. Yet investors should still keep in mind that private credit is hardly their only business.

Last week, the two giant fund managers both reported that they faced jumps in first-quarter redemption requests from their flagship nontraded private-credit funds, which cater to wealthy individual investors.

What got much less attention, however, was that Blackstone’s flagship nontraded real-estate fund recently had its best month for investor flows in years. That points to the potential for the biggest and most diverse managers to have other strategies on the upswing even while credit struggles.

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