Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Wednesday, May 27. In today's briefing, bankrupt auto-parts supplier First Brands Group has been hit with $286 million in claims by the U.S. government over alleged tariff fraud tied to undervalued Chinese imports. Chemical producer Trinseo, grappling with weak demand and rising costs, filed for chapter 11 to implement a creditor-backed restructuring that would cut $2 billion in debt and transfer control of the reorganized company to senior lenders. Meanwhile, preferred shareholders are challenging QVC’s bankruptcy plan, arguing the cable TV and online retailer is unfairly shifting parent-level assets to creditors of its operating units.

The U.S. government has accused First Brands Group of tariff fraud, alleging the bankrupt auto-parts supplier undervalued imported goods from China to avoid paying higher duties.

The Justice Department is seeking roughly $286 million in unpaid tariffs and penalties, according to a filing in Delaware bankruptcy court.

The U.S. joined a long list of creditors seeking repayment from the company, which filed for chapter 11 in September last year under the weight of a heavy debt pile. The company’s restructuring of its more than $10 billion of debt has since devolved into myriad asset sales and litigation, following a federal criminal indictment early this year that accused its top executives of orchestrating accounting fraud.

Houston Bankruptcy Judge Christopher Lopez denied conditional approval of First Brands’ disclosure statement on Tuesday, saying the short timeline isn’t sufficient for creditors to evaluate the plan given its complexity.

Judge Lopez said he also had “fundamental concerns” about the plan structure, particularly how the settlement and restructuring plan are linked.

“I don’t reach this conclusion lightly,” Judge Lopez said. “I’m fully aware of the potential consequences.”

The ruling could delay approval of the auto-parts supplier’s restructuring plan.

First Brands’ restructuring plan involves a global settlement that converts the majority of its operating entities’ bankruptcies to chapter 7 liquidation, while establishing a funded litigation trust for Premier Marketing Group to pursue fraud and other claims.

The U.S. bankruptcy watchdog objected to the plan, saying the surviving entity has no administrative claims, which makes it easier for First Brands' top lenders providing bankruptcy loans to be repaid before other creditors.

Judge Lopez asked First Brands and its creditors to confer on plan revisions and said he would set another hearing on the matter next month.

–Alicia McElhaney

Trinseo filed for bankruptcy protection Tuesday after earlier restructuring efforts failed to relieve its heavy debt burden as the chemicals producer contends with weakening demand and rising costs stemming from geopolitical tensions.

The Wayne, Pa.-based company, which produces plastics and latex binders used in a variety of industries, filed a chapter 11 petition in the U.S. Bankruptcy Court in Houston, with a restructuring plan supported by the majority of its lenders, who are expected to take control of the business.

Under the plan, Trinseo will reduce its debt by roughly $2 billion. The senior lenders have agreed to provide a roughly $158 million debtor-in-possession facility to fund the operations in bankruptcy. The lender group would also back a $450 million rights offering and receive nearly 100% of the equity in the reorganized company.

A group of preferred shareholders in QVC’s parent company is challenging the cable TV and online retailer’s bankruptcy restructuring plan, claiming it unfairly diverts assets to the creditors of its subsidiaries.

In an objection filed Monday in the U.S. Bankruptcy Court in Houston, investors including Cygnus Capital and Sona Asset Management, which hold a portion of the company’s $1.4 billion in preferred shares, said parent company QVC Group has little debt but holds $195 million in cash and a significant stake in a “valuable” subsidiary.

Peloton Interactive has hired Siddharth Thacker as the fitness company's new chief financial officer, effective June 22.

Peloton on Tuesday said Thacker joins the New York company from Rent the Runway, where he has been finance chief since May 2023,
Rent the Runway last week said Thacker would be leaving in early June.

Peloton said Thacker will receive an annual base salary of $635,000 and an annual cash bonus equal to 60% of his base pay.

The company said Saqib Baig, who stepped in as interim chief financial officer in March after Liz Coddington left the company, will remain chief accounting officer.

–Colin Kellaher

That was the size of the U.S. private-credit market at the end of 2024, according to a new study by the European Central Bank.

That's almost as big as America's subprime-mortgage market in 2006, just before it took down the world economy. The difference, the ECB said: Private credit represents 4.7% of U.S. GDP today, whereas $1.5 trillion in subprime mortgages represented nearly 11% of the economy back then.

The ECB, which looks after financial stability in the eurozone, said banks in the single-currency area have much less exposure to private credit than they did to U.S. subprime mortgages before the global financial crisis. That could change if private credit balloons as a source of funding for the artificial-intelligence industry, it said.

European insurers stand to lose much more than banks in a private-credit downturn, the ECB found, mostly from associated losses in public markets. Everyone has different definitions of private credit. In its paper, the ECB counted lending by non-bank finance companies to non-financial companies, excluding any loans that get syndicated or that private-credit funds sourced from other lenders.

—Joe Wallace

Consumer confidence edged downward in May as the inflationary effects of the war in the Middle East intensified, a monthly survey from The Conference Board said.

The research group said Tuesday its consumer confidence index fell to 93.1 in May from an upwardly revised 93.8 in April. Economists polled by The Wall Street Journal had expected a reading of 92.0.

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